After strong declines in stock markets around the world last week, today, at the beginning of the new week and month, indices seem to be rising. In anticipation of the US presidential election and its outcome, further optimistic data from China has appeared.
Caixin Manufacturing PMI rose to 53.6 pts in October, surpassing the market consensus and the September result of 53.0pts. This was the sixth month of the increase in factory activity in a row and the strongest growth since January 2011. Production growth was one of the fastest in the last decade, with new orders rising the most since November 2010. The level of purchases has also increased significantly. In turn, export orders grew for the third month in a row, but at a milder pace, in the face of a renewed outbreak in the northern hemisphere. The confidence index is the highest since August 2014. These figures may confirm that China has dealt best and fastest with the epidemic and is taking advantage of it to stay ahead of other economies.
US the day before the election
Among the futures contracts that seem to be rising today, there are also contracts for American indices, the day before the US presidential election. Joe Biden continues to lead the nationwide polls, but in some key states the advantage is shaky. Moreover, some states, due to the increase in the number of votes cast by correspondence, will have no results on election night.
In a worst-case scenario, with very little difference in votes, the results may be questioned by one party. This, in turn, could lead to greater volatility in the markets and, consequently, to a worsening of moods in the stock markets. In the US, the number of new coronavirus infections fell over the weekend from previous days' records, but there were still over 81 thousand new infections on Sunday.
Lockdown hits the oil market
On the wide market, oil prices may again attract attention. The price of a WTI barrel fell below 34 USD at some point today. Thus, the lowest level since May was reached. In mid-October, a WTI barrel cost over 41 USD.
The drop in prices seems to be taking place in the face of growing concerns about the recovery of demand for fuels due to the increase in coronavirus infections worldwide, which has led to the imposition of new restrictions in several countries, including the UK, France, Germany and Spain. The United Kingdom announced a second national monthly lockdown, on the same day that Portugal, Austria and Greece announced a partial lockdown. Bears' sentiment was also fuelled by the resumption of Libyan oil exports.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
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