News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Oil - US Crude
Bearish
Wall Street
Mixed
Gold
Bearish
GBP/USD
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
USD/JPY
Bullish
More View more
Real Time News
  • Slight jawboning from BoC Governor, however, CAD sees a muted reaction to the comment https://t.co/1enbIJhAX6
  • - If $CAD moves a lot higher it could have a material impact on our outlook and how we set monetary policy
  • - If $CAD continues to rise could be more of a headwind to export projections
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Silver are long at 91.09%, while traders in GBP/JPY are at opposite extremes with 68.92%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/uHjF1RXMxX
  • Heads Up:🇺🇸 Fed Waller Speech due at 17:00 GMT (15min) https://www.dailyfx.com/economic-calendar#2021-05-13
  • Macklem Q&A - Expect inflation to go up to 3% before pulling back - Would not over rotate on one month's inflation data
  • Commodities Update: As of 16:00, these are your best and worst performers based on the London trading schedule: Gold: 0.61% Silver: -0.06% Oil - US Crude: -3.58% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/cupf2HmOUY
  • The price of oil appears to be stuck within the opening range for May amid the failed attempt to test the March high ($67.98). Get #crudeoil market update from @DavidJSong here:https://t.co/6r9Iger50J https://t.co/LC27xlCypr
  • Forex Update: As of 16:00, these are your best and worst performers based on the London trading schedule: 🇳🇿NZD: 0.35% 🇨🇭CHF: 0.30% 🇯🇵JPY: 0.14% 🇦🇺AUD: 0.02% 🇨🇦CAD: -0.09% 🇬🇧GBP: -0.12% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/FMpuAZcLAz
  • BoE's Bailey - We don't think higher inflation will persist - We are watching inflation very carefully - US inflation number yesterday was very high - Will watch very carefully for how much of savings are spent by households
Stocks May Turn Defensive with US Presidential Election Eyed

Stocks May Turn Defensive with US Presidential Election Eyed

Ilya Spivak, Head Strategist, APAC

US PRESIDENTIAL ELECTION, GLOBAL STOCKS – Talking Points:

  • US presidential election may take top billing as 2020 gets underway
  • Range of outcomes may have more “risk-off” vs. “risk-on” scenarios
  • Technical cues warn of a defensive turn in key global stock markets

It probably goes without saying that the US presidential election and its impact on financial markets will be one of the major macro narratives preoccupying investors in 2020. The Fed’s apparent intent to fade into the background – it said this month that rates are expected to remain unchanged next year and signaled the bar is very high for that to be reconsidered – probably sharpens the focus on political considerations.

US President Donald Trump has been impeached in the House of Representatives, but markets seem to generally assume that he will be acquitted in a party-line vote in the Senate. That means he will remain at the top of the Republican Party ticket. Beyond that, speculation ahead of the vote in early November will be concerned with a variety of variables.

DEMOCRATIC PARTY NOMINEES THROUGH THE MARKETS’ EYES

The first key question is, who will be the Democratic Party nominee? The second – how will whoever that is stack up against Mr Trump in the markets’ estimation? The Democratic field offers a broad range of perspectives, but a clear dichotomy pitting those further to the political left and those closer to the center appears to have emerged among the leading candidates.

As ever, markets hate uncertainty most of all. This means that they are likely to be more uneasy with the prospect of electing someone promising a comparatively more radical platform. With that in mind, nominating either Bernie Sanders or Elizabeth Warren – both of whom favor rapid delivery of big-splash economic policy changes – might be met with relatively more anxiety than Joe Biden or Pete Buttigieg.

WILL THE MARKETS CHEER IF TRUMP WINS REELECTION?

Next, it is important to consider the markets’ perspective on the sitting President. They celebrated his election in 2016, inspired by hopes for tax cuts and deregulation and dismissive of trade war prospects as mere rhetoric. Since then, it has become clear that Mr Trump was entirely serious about forcing realignment of the US’ key trade relationships – especially with China – and willing to “rock the boat” to this end.

That has not gone unnoticed. A rise in Mr Trump’s job approval rating stalled alongside the widely-watched gauge of US consumer confidence from the University of Michigan just as PMI data pointed to a peak in US economic growth. That this occurred just as the administration’s economic policy focus shifted from taxes to trade – as evidenced by a surge in searches for news stories containing the key term “trade war” – seems hardly accidental.

Stocks May Turn Defensive with US Presidential Election Eyed

If Trump is reelected, he and his team might reasonably conclude that they’ve secured a mandate to continue pursuing a combative approach to trade relations. Indeed, recent comments from US Trade Representative Robert Lighthizer suggest that the White House may be preparing to tighten the screws on partners in the European Union (EU) even as negotiating the next phase of the US-China trade deal gets underway.

With all of this in mind, the prospect of a second Trump term may be met with far less enthusiasm from investors than the first. This coupled with markets’ likely assessment of the Democratic candidate alternatives suggests that the range of election outcome scenarios offers more “risk-off” permutations (at various degrees of severity) than “risk-on” ones.

STOCKS MAY TURN DEFENSIVE AS 2020 GETS UNDERWAY

That might make for a defensive tone as portfolios are rebalanced for an election-focused year. Technical positioning seems to foreshadow as much. Negative RSI divergence has emerged even as stock market benchmarks in the US, the Eurozone, Japan and Hong Kong hit meaningful – and in some cases record-setting – highs, warning of ebbing momentum that may precede reversal.

S&P 500

Stocks May Turn Defensive with US Presidential Election Eyed

S&P 500 chart created using TradingView

EURO STOXX 50

Stocks May Turn Defensive with US Presidential Election Eyed

Euro Stoxx 50 chart created using TradingView

NIKKEI 225

Stocks May Turn Defensive with US Presidential Election Eyed

Nikkei 225 chart created using TradingView

HANG SENG INDEX

Stocks May Turn Defensive with US Presidential Election Eyed

Hang Seng Index chart created using TradingView

STOCK INDEX TRADING RESOURCES

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

To contact Ilya, use the comments section below or @IlyaSpivak on Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES