News & Analysis
U.S Equities rise as markets look to midterm results, Oil drops back to April levels; Risk gains to USD & JPY – AUDUSD reclaims .72
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U.S stocks closed higher overnight, the US30 at this point is pushing for a 2nd higher week in a row. The mid-term U.S elections the main focus in last nights session. The Dow Jones closed 173 pts higher, the S&P500 added 17.14 pts and the Nasdaq closed 47 pts higher.
Democrats are expected to take control of the House away from Republicans while the GOP maintains a slim majority in the Senate. Stocks have historically done well under a divided government. Since 1928, the S&P 500 has averaged an annual return of 12% when Congress is split and Republicans control the White House. But “this is a very different election and gridlock may not be good” for the market, said Gene Goldman, head of research at Cetera Investment Management. Goldman said the GOP-led government has implemented key policies that are helping the economy grow, and gridlock would slow down similar policies in the future.
With no key U.S data tonight or tomorrow, traders will move focus to Friday’s FOMC rate and statement.
Oil continues to set new monthly lows, the Trump administration on Monday reinstated sanctions on Iran’s energy, banking and shipping industries, however, Washington granted temporary waivers to eight countries, including China and India, the biggest purchasers of Iran’s oil. This failed to stop the rout, USOUSD lost 102 cents closing at 61.81. price has now dropped back to levels not seen since April this year.
The USD traded mainly lower overnight as risk gained through the U.S session. The EUR threatened a few times to move lower but buyer demand returned. The EURUSD closed 21 pips higher while the AUDUSD (+34) closed back above the .72 handle. Traders continue to return due to stable US-China trade news and a weaker USD. The GBPUSD continued its stronger week adding just under 60 pips.
Gold gave back 4.88 rally to end the session just over $5.00 lower. Equity strength offset demand as traders moved to buy due to midterms.
Risk moved higher to the Yen. The USD added 22 pips to the Yen and held 11 pips higher to the CAD. This morning the AUD is slightly lower to the Yen and USD while the EUR and GBP are higher. The NZDUSD jumped after positive employment data this morning. After yesterday’s strong session the ASX200 is currently 9 points lower.
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Sources; CNBC – All times are AEDT
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