Elections and rates: Wall Street pushes into positive territory

On Wall Street, most investors expect the Republicans to win the midterm elections.

Elections and rates: Wall Street pushes into positive territory

On Wall Street, most investors expect the Republicans to win the midterm elections. This has consequences for stocks, oil and the dollar - and very different ones. In addition, the subject of interest rate policy continues to feature prominently on the agenda

Wall Street closed in gains again. Participants took the heightened volatility as a sign of uncertainty ahead of the results of the US midterm elections and key US inflation data for October due on Thursday. These should provide a hint as to whether inflation is beginning to ease and allow the US Federal Reserve to adopt a less hawkish stance on interest rate hikes.

The general expectation is a victory for the Republicans at least in the House of Representatives, and possibly also in the Senate, it said with a view to the midterm elections. This would mean that US President Joe Biden would lose his majority in Congress. Any outcome for US stocks is better than a majority of Democrats, according to market analyst Ipek Ozkardeskaya of Swissquote Bank. A Republican majority in both houses is likely to give stocks more of a boost than a Democratic majority in both houses or split majorities.

Historically, the so-called midterm elections are "the best buy signal we have," Deutsche Bank said. Since the Second World War, the S

The Dow Jones index rose by one percent to 33,161 points. The index moved in a range between 33,355 and 32,831 points. The S

Among individual stocks, Lyft plummeted nearly 23 percent. The ride-hailing service and Uber competitor has reported slower revenue growth and a decline in user numbers. Tripadvisor dropped more than 17 percent. The reason was a drop in profits. Dupont shares were up 7.4 percent. The US specialty chemicals group exceeded earnings expectations in the third quarter of 2022 and confirmed its forecast for the full year.

US software giant Microsoft has encountered resistance with its plans to buy video game maker Activision Blizzard. The EU Commission wants to examine the takeover in detail under antitrust law, as it announced. For Microsoft, the takeover, worth almost 69 billion US dollars, is said to be the largest in the company's history. However, the shares of Microsoft and Activision Blizzard were unimpressed. This was supported by the fact that Activision Blizzard exceeded market expectations in the third quarter.

Republican victory likely to hurt oil prices

The dollar fell again after a brief interim recovery. The dollar index fell 0.5 percent. Should Republicans win, "optimism will rest on two pillars" -- an energy policy that will cool oil prices and hence inflation, which is good for stocks and bad for the dollar, and a divided government that will keep spending in check as we "enter an environment where fiscal imbalances play a role," it said.

Uncertainty about the outcome of the midterm elections fueled the bond market. Yields came back significantly. The yield on ten-year paper fell by 7.4 basis points to 4.14 percent. The market is also positioning itself for lower rate hikes, it said. The CME FedWatch tool currently puts the probability of a 50 basis point rate hike in December at 57 percent and a 43 percent chance for 75 basis points. The inflation data could change these forecasts, however, it said. The same applied to the safe haven of gold. The price of the precious metal rose by 2.2 percent.

Oil prices were under pressure, posting their biggest daily decline since mid-October. WTI and Brent are down as much as 2.9 percent each. The US midterm elections and the uncertainty as to whether the Covid restrictions in China will actually be lifted weighed on sentiment, it said.

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