On Wall Street futures slightly higher as the results of the US midterm elections are awaited, after the vote given by the Americans for the renewal of Congress on Tuesday 8 November. From the first indications, it emerges that the Republicans, as expected, will take control of the House of Representatives. It is head to head between Republicans and Democrats, however, in the Senate.
At around 1.40 pm Italian time, Dow Jones futures are up 0.09%, S&P 500 futures are up 0.19%, Nasdaq futures are up 0.42%. On the government bond market, 10-year Treasury rates fall below the 4.10% threshold to 4.092% and two-year rates fall to 4.604%.
The expectation of the markets, in general, is also due to the publication of the data relating to US inflation, measured by the consumer price index (CPI), and relating to the month of October.
The economists interviewed by Dow Jones expect the index to rise by 0.6% compared to September, therefore on a monthly basis, or by 7.9% on an annual basis.
This is a key figure for the Federal Reserve, which will meet in mid-December, to churn out another rate hike in its battle against inflation.
Excluding the impact of energy and food prices, core CPI inflation is expected to grow by 0.5% on a monthly basis and by 6.5% on an annual basis.
Yesterday the Dow Jones fell by 646 points (-1.95%), the S&P 500 slipped by 2.08%, the Nasdaq fell by 2.48%.
An article by the CNBC underlines that the sharp falls that hit the US stock market yesterday were caused by uncertainty about the outcome of the midterm elections.
The market had actually hoped that the Republicans would have swept the ball, taking control of the House of Representatives and the Senate, with the vote last Tuesday, 8 November. On the other hand, there is no shortage of heads-up contests, especially for the Senate seats in Arizona, Georgia and Nevada. It must be said that several strategists had warned before Election Day that the outcome of the vote would not arrive soon, even for the votes cast by mail.
Chris Zaccarelli, chief investment officer at the Independent Advisor Alliance, commented to Cnbc that the lack of clarity on the outcome of the elections, together with the uncertainty about the imminent publication of the data relating to the consumer price index and, also, to some quarterly reports that continue to be released by some Corporate America companies (Disney plummeted by more than 10% yesterday after disappointing accounts), were the main factors that weighed on Wall Street yesterday.
“These three factors are bringing uncertainty,” said Zaccarelli – And, as everyone knows, the markets don’t like uncertainty “.
The massive sell-offs were also triggered by yet another crypto drama, which yesterday saw cryptocurrency trading platform Binance turn around its plan to acquire its rival FTX.
Anxiety over the crypto universe has put pressure on the hi-tech sector, causing Bitcoin to slide to its lows since 2020.
In the pre-market on Wall Street, the recovery of crypto shares, such as Coinbase, MicroStrategy and Robinhood, is highlighted today, after the strong collapses of the eve of.
Coinbase dropped 9.5% yesterday, Robinhood plummeted 13.8%, and MicroStrategy slipped nearly 20%.
Returning to the plague of inflation, which continues to haunt the Fed, the trend of the CPI figure could provide useful information on the extent of the monetary tightening that Jerome Powell’s Federal Reserve will launch again in December.
US central bank president Powell has hinted that US rate hikes could be less aggressive (although, at the same time, he said the terminal rate could remain higher than expected).
On November 2, the Fed raised rates by 75 basis points, taking them from the range between 3% and 3.25% to the new range between 3.75% and 4%, a record value since 2008.
Focus also on BlackRock’s view of Wall Street. The strategists have announced that they have an underweight rating on Wall Street, (but also on the European stock exchanges and the London stock exchange), in a time horizon of 6-12 months.
“We are underweight on US equities – reads the BlackRock note – the Fed intends to raise rates in restrictive territory – explain the strategists – and the sell off that has occurred since the beginning of the year partly reflects this. Despite this, valuations have not fallen enough to reflect the weaker earnings outlook ”.