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Stocks fall, gold retreats from record peak amid US election worries
Global stocks edged lower on Oct. 23 amid tepid trading ahead of the U.S. election, while gold prices retreated from record highs, dragged down by gains in the U.S. dollar.
Gold Bullion from the American Precious Metals Exchange (APMEX) is seen in this picture taken in New York, September 15, 2011. REUTERS/Mike Segar (UNITED STATES - Tags: BUSINESS)/File Photo / Reuters
Global stocks edged lower on Oct. 23 amid tepid trading ahead of the U.S. election, while gold prices retreated from record highs, dragged down by gains in the U.S. dollar.
Investors are also rethinking how much the Federal Reserve might need to cut interest rates after the most recent U.S. economic data pointed to an economy that continues to expand and create jobs.
Markets are pricing a 92 percent chance of a 25-basis-point cut at the Fed's next meeting in November and another 25-bps cut by year-end. A month ago, traders were pricing in as much as a full percentage point in cuts by January. The yield on benchmark U.S. 10-year notes hit three-month highs and was last up 3.2 basis points at 4.238 percent.
"This is a classic case of buy the rumor and sell the fact," said Bill Strazzullo, chief markets strategist at Bell Curve Trading in Boston. "Buy the rumor of the rate cuts, and then as you get the rate cut, sell into it."
On Wall Street, all three main indexes finished lower, driven by losses in consumer discretionary, technology and communication services stocks. Real estate and utilities were the biggest gaining sectors.
The Dow Jones Industrial Average fell 0.96 percent to 42,514.95, the S&P 500 fell 0.92 percent to 5,797.42 and the Nasdaq Composite fell 1.60 percent to 18,276.65.
The MSCI All-World index lost 0.79 percent, while in Europe, the STOXX 600 finished down 0.30 percent.
"We'll see what the Fed does if they can handle this the right way and get the soft landing or not. And then, on top of that, obviously you got the election," Strazzullo added, referring to the Nov. 5 U.S. election.
The chances of Republican candidate Donald Trump beating Democratic candidate Kamala Harris have recently edged higher on betting websites, though opinion polls show the race to the White House remains too tight to call.
The prospect of another Trump presidency has been in focus for investors, as his policies include tariffs and restrictions on undocumented immigration, among other measures, which are expected to push up inflation.
"There is an illusion that if Trump wins, you want to buy energy. Energy actually underperformed during the period from 2016 to 2020 (when Trump was president). What did outperform, and people should be buying on that basis, would be industrials like Boeing, small caps, and, believe it or not, emerging markets and China equities," said Thomas Hayes, chairman at Great Hill Capital in New York.
Gold retreated after hitting record highs amid gains in the U.S. dollar. Demand for safe-haven gold is partly driven by U.S. election worries and geopolitical tensions in the Middle East and Europe.
Bullion, which has risen 33 percent this year, was last down 1.19 percent at US$2,715.62 an ounce. U.S. gold futures fell 0.1 percent to US$2,741.50 an ounce. It hit a record high of US$2,758.37 earlier in the session.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro,rose 0.26 percent to 104.37.
Against the Japanese yen, the dollar strengthened 1 percent to 152.57. The euro fell 0.11 percent to US$1.0785.
Goldman Sachs said in a note on Oct. 22 the euro could fall by as much as 10 percent in a scenario under which a Trump presidency ushered in hefty tariffs and tax cuts.
Oil prices fell after data showed U.S. crude inventories rose by more than expected even as refining activity rebounded.
Brent crude futures settled at US$74.96 per barrel, down 1.42 percent. U.S. West Texas Intermediate crude futures settled down 1.35 percent at US$70.77.
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