Early US election results point to a tight race

Some early results from the US election are starting to roll in. At the time of writing, Trump had notched an early lead, with 198 electoral college votes, compared to Harris’ 109. Candidates need 270 votes to secure a win. Trump’s large margin at this point in the morning is primarily a function of where polls have closed, with voting in the traditionally Democratic states of California and Washington still ongoing. Counting also remains underway in each of the seven key swing states. Final results could still take several days, depending on whether any legal challenges are mounted.

The October US ISM services index continued to point to robust activity in the sector, jumping to a value of 56 from 54.9 the month prior. The outturn was materially higher than consensus expectations for a fall to 53.8. The rise on the month was in large part driven by the employment sub-component which rebounded from a value of 48.1 in September to 53, with firms hiring in anticipation of the festive season.

Today’s Economic Data and Events

• 11:00 GE factory orders (Sep). Forecast: 1.5% m/m

Fixed Income

• Moves in US treasury yields were mixed on Tuesday, with investors waiting on election results. The 2yr yield rose 2bps to 4.1765%. The 10yr yield declined by 1bps to close at 4.2708%, after an auction of 10yr notes saw solid demand.
• Yields in most European bond markets moved higher on Tuesday. The 10yr UK gilt yields rose 7bps to 4.5281%, with market concerns about the latest UK budget remaining in play. The 10yr Bund yield also rose, gaining 3bps to 2.424%.

FX

• The dollar spot index declined once more on Tuesday, falling 0.4%. EURUSD gained 0.5% to 1.093, GBPUSD rose 0.65% to 1.3042 and USDJPY fell 0.33% to 151.62.
• Commodity currencies also gained against the dollar on the day. AUSUSD gained 0.8% to 0.6638, NZDUSD rose 0.56% to 0.6007, and USDCAD fell 0.56% to 1.3824.
• Early morning trade has, however, seen the dollar strengthen sharply.

Equities

• US equity indices saw gains on Tuesday. The Dow Jones rose 1.02%, the S&P 500 gained 1.23% and the NASDAQ increased by 1.43%. Several of the major European equity markets also rose on the day. The Eurostoxx 50 rose 0.38%, the CAC 40 increased by 0.48%, and the Dax gained 0.57%. The FTSE 100, in contrast, fell 0.14%.
• Locally, the DFM gained 0.2% and the ADX rose 0.97%.

Commodities

• Oil prices held on to gains made on Monday, with a Hurricane Rafael posing a threat to production in the Gulf of Mexico. Brent futures rose 0.6% to USD 75.53/b, while WTI gained 0.73% to reach USD 71.99/b.