Opening Bell: Global Selloff On U.S. Election Fears; Oil Up; Dollar Steadies

Key Events/h2

U.S. futures, including the Dow, S&P, NASDAQ and Russell 2000 sold off with global equities on Thursday morning as investors' were concerned that voter disruption in the presidential election would lead to a delayed result. The acceleration of the coronavirus across Europe is also denting sentiment.

The dollar is steady while Bitcoin continues to advance.

Global Financial Affairs/h2

Contracts on the S&P 500 extended their decline—after the underlying index fell to its lowest level in two weeks on Wednesday—following the record numbers of COVID-19 infections there, exacerbating local traders' worries about any U.S. stimulus and the elections whipsawing markets.

From a technical perspective, however, the pan-European gauge seems to be heading down.

The index is falling for the fourth straight day, after retesting for the second time what appears to be a bearish trend.

Except for Hong Kong’s Hang Seng (+0.1%) Asia was painted red. The MSCI Asia Pacific Index dropped 0.85%, with Japan’s Nikkei and South Korea’s KOSPI both registering 0.7% losses.

It is worth noting that despite the global equity selloff, the institutional haven, U.S. Treasuries, including the 10-year, also fell. Perhaps on profit taking after yields reached their highest level in four-and-a-half months.

The dollar shored up after falling to more than a six-week low yesterday. Ironically, the dollar trading flat suggests that currency traders are uncertain about stimulus, while equity traders are openly pessimistic. Perhaps, the Treasury selloff is offsetting a dollar rebound on the reduced chances of a fiscal aids package before Nov. 3.

Technically, we expect the dollar to continue lower, after upending a H&S bottom into a H&S continuation pattern, following along its downward path since the March highs.

Gold pared yesterday’s gains.

Bitcoin advanced for the sixth day.

The move is part of an upside breakout of a bullish pennant.

Oil declined on Wednesday due to a weakening demand outlook after the U.S. reported that stocks have built. However, the black gold rebounded into gains, revealing there is still demand.

We have been expecting oil to fall lower since the downside breakout of a bearish wedge. However, the price did not make a lower trough but rather rebounded from the early September lows and has been forming a small H&S bottom since. If it crosses the $42 level it could create a short-term rally.

Up Ahead/h2

• On Thursday the final debate before the Nov.3 U.S. election between President Donald Trump and former Vice President Joe Biden will be broadcast live from Nashville, Tennessee.
• U.S. jobless claims are released on Thursday.

Market Moves/h2

Stocks/h3

• Futures on the S&P 500 Index fell.
• The Stoxx Europe 600 Index decreased 1.1%.
• The MSCI Asia Pacific Index declined 0.5%.
• The MSCI Emerging Markets Index dipped 0.3%.

Currencies/h3

• The Dollar Index was little changed at 92.7.
• The euro dipped 0.% to $1.1833.
• The British pound decreased 0.3% to $1.3105.
• The Japanese yen strengthened 0.1% to 104.52 per dollar.

Bonds/h3

• The yield on 10-year Treasuries decreased one basis point to 0.81%.
• The yield on two-year Treasuries was unchanged at 0.15%.
• Germany’s 10-year yield gained less than one basis point to -0.58%.
• Britain’s 10-year yield rose one basis point to 0.255%.

Commodities/h3

• West Texas Intermediate crude increased 0.2% to $40.06 a barrel.
• Gold weakened 0.3% to $1,918.25 an ounce.