Live Markets: US 2024 Presidential election tops investor fears, survey shows

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15/11/2023 10:30

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      STOXX 600 up 0.6%
    

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      FTSE outperforms as inflation slows
    

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      Alstom tumbles
    

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      Wall St futures rise
    

  
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    U.S. 2024 PRESIDENTIAL ELECTION TOPS INVESTOR FEARS, SURVEY SHOWS (1030 GMT)
    Uncertainty around the upcoming 2024 presidential elections is dominating investor worries,
according to a recent survey by Janus Henderson Investors. 
    "Despite investors' concern about the 2024 U.S. Presidential election, results haven't
historically been a reason to exit the capital markets," said Matt Sommer, head of specialist
consulting group at Janus Henderson Investors.
     During presidential election years, the average return for the benchmark S&P 500  .SPX 
from 1937 to 2022 was 9.9%, the note added. In non-election years, the average return was 12.5%.
    
 Time period                               Average returns on the
                                           S&P 500 (1937-2022)
 All years                                 11.90%
 Presidential election years               9.90%
 Non-election years                        12.50%
 
    Nearly half of the survey participants were "very concerned" about the election year, with
older investors much more concerned than the millennials. 
    Fears around a potentially tumultuous election year, surpassed more immediate developments
including persistent inflation (35%), risk of recession (29%), rising interest rates (27%), and
poor stock market performance (20%).
    The survey included 1000 mass affluent and high-net-worth investors with $250,000 or more in
investable assets. 
    
 Party Control                             Average returns on the
                                           S&P 500 (1937-2022)
 Unified Democrat government                                 11.5%
 Unified Republican government                               16.1%
 Divided government, Democratic President                    15.9%
 Divided government, Republican President                     9.4%
    
    (Bansari Mayur Kamdar)
    *****

    ROTATION BACK INTO CHINA? (0940 GMT)
    Active managers in global emerging market funds have been rotating back into China over the
last 3 months, HSBC's stock positioning data showed, while paring back positions in India and
Brazil. 
    The move comes as investors and analysts hope for more stimulus from Beijing to prop up an
economy clobbered by property sector distress, geopolitical tensions and debt risks. Latest
stimulus and economic activity data fanned some optimism, although analysts have warned against
euphoria. 
    But, with other emerging markets outperforming, especially Indian equities, the crowded
position leaves room for some moving around. 
    "Despite weak results (from companies) in China, favorable price performance suggests a lot
of bad news is already priced in," said Alastair Pinder, head EM and global equity strategist
said in a separate note on Q3 earnings. 
    Funds have reduced their large underweight positions in consumer and software and services
names, notably Alibaba, Tencent, Meituan, Baidu and JD.com, HSBC's data showed. 
    The positioning data covers nearly 300 active global emerging market (GEMs) funds with a
combined AUM of $530 billion.
    Positions are also being built up in Mexico and Greece, HSBC says, with America Movil, Cemex
benefiting in Latam. 
    In India, GEMs funds have reduced their overweight position in banks such as Kotak and HDFC,
and cut exposure to tech names such as Infosys, Tata Consultancy Services and HCL Technologies.
    Funds have been paring back positions in some of the bigger underperformers in Brazil
including Localiza, B3 and Lojas Renner, while exposure to Petrobras has also been cut.
    At the sector level, funds are overweight industrials and banks, but underweight software
and services. Funds also favour value relative to growth, HSBC's data shows.
    
    (Susan Mathew)
    *****

       
    STOXX GOES FOR HAT-TRICK, TECH STOCKS ROAR (0903 GMT)
    Stocks are enjoying their third day straight of gains as the prospect of rate cuts comes
into firm view following softer-than-expected UK inflation data on Wednesday and U.S. CPI on
Tuesday.
    The STOXX 600  .STOXX  is up 0.9% at its highest in a month, and the FTSE 350  .FTLC  is up
1.3%. 
    Interest-rate sensitive tech stocks are soaring above the rest of the market. The European
tech index  .SX8P  is up 1.8%, taking its rally this week so far to 4.4%
    Basic resources  .SXPP  stocks are also doing well, up 1.6% and buoyed by the likes of Anglo
American  AAL.L , up 3.5%. Some expectation-beating industrial and retails sales figures from
China are surely helping, and the same goes for European luxury stocks  .STXLUXP , up 1.8%. 
    Telecoms is the only sector languishing in negative territory, down 0.2%.  
    French train maker Alstom is the biggest faller of the STOXX 600, down 11.7% after it said
it is mulling a capital increase and warned on cash flow. 
    
    (Lucy Raitano)
    *****
    
    
    FUTURES POINT TO CELEBRATORY OPEN, FTSE TO SHINE (0740 GMT)
    European stocks are heading for an excited start to Wednesday, with the 2.1% bounce over the
last two sessions set to grow further as traders digest major inflation readings and their
implications for rates.
    EuroSTOXX50  .STXEc1  futures and DAX futures  .FDXc1  are ticking 0.1% higher, but FTSE
futures  .FDXc1  are shining, up 0.5% after the index underperformed on Tuesday.
     A lower-than-expected reading on British annual consumer price inflation (CPI) came in this
morning, with CPI falling to 4.6% in October from 6.7% in September.
    The welcome UK surprise comes hot on the heels of flat CPI out of the U.S. on Tuesday, news
sufficient enough to lead traders to see Fed interest rate cuts as early as next May.
    In company news, eyes will be on shares in French train maker Alstom  ALSO.PA  at the open
after it said it plans to cut about 1,500 jobs and reported H1 net adjusted income at €174
million versus €179 million a year ago. Pre-market indications from traders hint at a 5% drop. 
    In the UK, British power generator and network operator SSE Plc  SSE.L  has reported
half-year earnings above its forecast. 
    
    (Lucy Raitano)
    *****
    
    UK INFLATION TO TEST MARKET'S UPBEAT MOOD (0703 GMT)
    Just one-tenth of a percentage point was enough to trigger big moves in global markets that
were some of the sharpest we've seen this year.
    The U.S. CPI came in flat for last month, against consensus expectations of a 0.1% rise. The
core rate, at 0.2%, also bettered forecasts for 0.3%. A high number would have amplified the
Fed's recent hawkish tone, so the surprise move in the opposite direction has had a dramatic
effect.
    Ten-year and two-year Treasury yields dropped 20 basis points and the dollar marked its
steepest selloff in a year, highlighting how much markets' expectations - and cash - were riding
on the data.
    A pivot from hikes to cuts is now priced for May in the interest rate futures markets, with
a 30% chance it happens as soon as March.  FEDWATCH 
    Next up is British inflation  GBCPXY=ECI  data, due at 0700 GMT. Expectations are for a big
shift down for October, mainly due to falling energy prices, with annual headline inflation seen
slipping below 5% for the first time since 2021.
    October's purchasing manager's index survey, however, showed services companies putting
through their steepest price rises in three months.
    Sterling  GBP=D3  broke through its 200-day moving average on Tuesday as the dollar slumped,
and a sticky inflation reading could propel further gains.
    But geopolitics could spoil things.
    In the Middle East, Israel raided the Al Shifa hospital in Gaza, health officials told Al
Jazeera.
    Chinese President Xi Jinping is making his first visit to the United States in six years and
is due to meet President Joe Biden on Wednesday morning, in what U.S. officials have billed as a
chance to reduce friction in the powers' relations.
    Meanwhile, good news from China added to the broad cheer. Retail sales beat expectations,
industrial output picked up and the central bank poured liquidity into the banking system, which
together gave a boost to commodity prices.
    Iron ore scaled 2-1/2 year peaks, and Singapore futures  SZZFZ3  are up almost 20% in just
over a month.
    Chipmaker Infineon  IFXGn.DE  and troubled energy company Siemens Energy  ENR1n.DE  post
earnings on Wednesday, although the latter's numbers are likely to be overshadowed by Tuesday's
promise of an $8 billion government backstop from Germany. 
    U.S. retail sales figures are due at 1330 GMT. A drop is forecast, while a strong reading
could dampen the exuberance over rate cut expectations. 
 
    Key developments that could influence markets on Wednesday:
    Earnings: Infineon, Siemens Energy, Alstom, Target
    Events: Xi-Biden meeting expected in San Francisco Bay Area
    Economics: UK CPI, U.S. retail sales


    (Tom Westbrook)
    *****

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