Monday November 7th

U.S. stock markets index futures rose Monday as a packed week kicked off, with congressional midterm elections and key inflation data on deck over the next few days. Dow Jones Industrial Average futures traded higher by 70 points, or 0.2%. S&P 500 and Nasdaq 100 futures gained 0.2% and 0.2%, respectively. Those gains came even as Apple fell more than 1% after the tech company said iPhone production has been temporarily reduced because of Covid-19 restrictions in China. Meanwhile, shares of Palantir declined nearly 2% in the premarket after missing earnings forecasts, though revenue came in slightly above expectations. Tuesday’s midterm election will determine which party will control Congress, and impact the direction of future spending. Democrats currently control the House, and have a majority in the Senate. According to RBC’s Lori Calvasina, investors could approve of a potential gridlock that may come out of the midterm elections as a Democratic president, with a Republican or split Congress, has historically meant above-average gains. ″[The] conventional wisdom that the stock market likes political gridlock is supported by the historical data in this instance,” Calvasina wrote in a Monday note. On the economic front, investors are anticipating Thursday’s CPI report will give further insight into the Federal Reserve’s efforts to squash inflation. A hot inflation report could signal to investors that a pivot from higher interest rates, for longer, could be further away than expected. ″[In] order for the equity and bond markets to match the post-peak inflation performance noted in the table, inflation needs to keep coming down — and at a faster pace than we’ve yet seen. Until the Fed signals the ‘pivot’ is near, things could remain challenging,” Baird’s Ross Mayfield wrote in a recent note. Wall Street is coming off a strong session, with the Dow rallying 400 points, or 1.3%. The S&P 500 and Nasdaq Composite also popped more than 1% each. Still, the major averages closed the week with losses. The Dow ended a four-week win streak on rate hiking fears. Elsewhere, several companies are expected to report Monday including Activision Blizzard, Lyft and Take-Two Interactive. Corporate earnings season is winding down with a majority of companies in the S&P 500 having reported results. The Hang Seng index in Hong Kong gained 2.55% in the final hour of trade and the Hang Seng Tech index gained 3.88%. Mainland China’s Shanghai Composite was fractionally higher while the Shenzhen Component gained 0.232%. The Nikkei 225 in Japan closed 1.21% higher to close at 27,527.64 and the Topix also gained 0.98% to close at 1,934.09. In South Korea, the Kospi was up 0.99% to close at 2,371.79. The S&P/ASX 200 rose 0.6% higher in Australia to close at 6,933.7. Oil prices were stable on Monday, hovering close to $100 a barrel as support from a weaker dollar and recovering Chinese crude imports met renewed demand concerns linked to China’s stringent Covid containment approach. Brent crude futures fell 7 cents, or 0.05% to $98.52 a barrel. U.S. West Texas Intermediate crude was at $92.46 a barrel, down 15 cents, or 0.2%. Gold prices eased on Monday as some investors locked in profits after a sharp rise in the previous session, while markets awaited this week’s U.S. inflation data to get cues on the Federal Reserve’s rate hike path. Spot gold fell 0.2% to $1,677.48 per ounce, while U.S. gold futures rose 0.2% to $1,680.70.