Global stock markets rallied Monday as investors braced for a critical week marked by the US presidential election, a Federal Reserve rate decision, and expected economic stimulus from China. The dollar dipped, while oil prices spiked 2.5% after OPEC+ producers announced they would extend output cuts through next month, aiming to balance supply amid demand uncertainties in China and the United States.
Major markets in Europe and Asia followed Wall Street’s positive lead from Friday, with Paris, Frankfurt, Hong Kong, and Shanghai all seeing gains. London’s FTSE rose 0.6% in midday trading as markets anticipate the Bank of England might cut its interest rate after a dip in inflation below target.
Analysts consider this week pivotal, with the US presidential race proving tight as Democratic Vice President Kamala Harris and Republican Donald Trump vie for the White House. Both candidates have pledged to adopt tougher policies toward Beijing, with Trump promising a potential 60% tariff on all Chinese imports. A recent Iowa poll showed Harris slightly ahead, leading to a dip in the dollar as markets weighed the possibility of a Democratic win.
The results of the election will not only determine the presidency but also control of Congress, with the Republican Party poised to potentially secure both the House and Senate. If Republicans sweep all three, this could lead to significant fiscal changes, affecting Treasury yields and pressuring bond markets, explained Peter Esho of Esho Capital.
Meanwhile, investors await the Federal Reserve’s policy decision, where a 25-basis-point rate cut is expected following last month’s 50-point reduction. Across the Pacific, Beijing’s upcoming economic meeting is expected to address a new stimulus package, with one trillion yuan anticipated in additional budget support for local governments and banks.
Oil prices found further support after Iranian Supreme Leader Ayatollah Ali Khamenei issued a warning to the United States and Israel over recent regional tensions, vowing a “tooth-breaking response” following a recent exchange of missile attacks.
