The FTSE is sliding into the red this morning as are most European markets ahead of what is likely to be a cautious day in the US as the country goes to the polls. A mixture of positive results from mid-tier companies did little for the London index which was pulled down by supermarket Morrisons and a number of consumer companies including hotels and betting firms. Sterling is holding up against the euro and the dollar which is moving in a tight range ahead of the US midterms.
US elections: will there be a changing of the guard in Congress?
President Trump is on a last-minute tour of the country, trying to shore up support for Republicans who are in some danger of losing seats in the Senate and the House of Representatives on Tuesday, according to US polls. Businesses are keeping a wary eye on the developments as a number of Trump’s policies, including massive tax cuts, had fuelled a nearly 30% rally in the stock market this year. But looking at past situations where a Republican president ended up with a Democratic majority in Congress, stock markets still tended to move higher rather than remain capped, despite the initial scepticism. Whichever way the US elections pan out there are still underlying factors in the US economy that will cause the markets to slow down – October’s bond sell off being a reminder that inflation is high, interest rates continue to rise and that headwinds are gathering for the US economy.
UK consumer spending
The doom and gloom mood that swirls around the UK high street continues even when statistics show data that is slightly better than expected. Investors are still scared by the thick flow of negative news this year that involved mass shop closures and bankruptcies. However, October seems to have brought some light to retailers as consumer spending perked up from September, although the increase was not much compared with the heady days of rises in retail spending before Brexit became a serious concern. Investors didn’t take favourably to the report from Morrisons supermarket that its sales rose by 5.6%, mainly because a closer look revealed that only a small part of that increase came from shop sales while the rest was fueled by wholesale activity. Retailers are now pegging their hopes on the massive spendfest that is Black Friday on 23 November and then the run up to Christmas.
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.