Wednesday November 9th


Stock futures fall slightly as control of Congress is still unclear

U.S. stock markets index futures were slightly lower — following recent market gains — as results of the midterm elections provided no clear answers about who would control Congress yet. Futures tied to the Dow Jones Industrial Average fell 123 points, or about 0.4%. S&P 500 futures shed 0.3% and Nasdaq 100 futures dipped 0.3%. Stocks are coming off three-straight days of gains into the election, where Wall Street was expecting Republicans to gain ground and block any future tax and spending plans. The Dow climbed 333 points on Tuesday for its third-straight session of gaining more than 1%. But control of Congress was not clear. NBC News was not yet projecting control of the House of Representatives with an NBC estimate suggesting Republicans could win 220 seats, which would be a narrow majority. In one of the key races that could determine Senate control, Democrat John Fetterman defeated Republican Mehmet Oz for the pivotal Senate seat in Pennsylvania, according to an NBC News projection. Oz had the backing of former President Donald Trump, whose endorsed candidates saw spotty levels of success across the country. Critical Senate races in Georgia and Nevada were unresolved. “It looks like the strong Republican win that was anticipated yesterday did not happen, and that reduces the chance of the Congress and the Senate extremely lowering spending of the President,” said Bokeh Capital’s Kim Forrest. While the election captivated market attention, investors may want to move on now as the Federal Reserve raises interest rates to bring down inflation, potentially tipping the economy into recession. The political landscape “will fascinate the Washington chattering class, but for the markets, the focus will shift to whether a recession looms, whether the Fed will end its tightening this winter, and whether a truce and negotiations are possible in the Ukraine war,” wrote Greg Valliere, chief U.S. policy strategist at AGF Investments. The market’s recent rally occurred at the front end of a strong seasonal period. Historically, stocks tend to rise after midterm elections and the policy clarity it brings, and the final two months of the year are considered a bullish period for investors. Shares of Facebook parent Meta Platforms rose 3% premarket after the social media giant announced it will be laying off more than 11,000 workers. Founder and CEO Mark Zuckerberg said he was too optimistic about growth and now needs to streamline the company. One stock that weighed on futures was Disney, which fell more than 8% in early trading after the entertainment giant missed estimates on the top and bottom lines for its fiscal fourth quarter. Asia-Pacific stocks were mixed as investors digest incoming results of the United States midterm elections and China’s annualized producer prices fell for the first time in October since December 2020. The Hang Seng index in Hong Kong lost 1.62% In mainland China, the Shanghai Composite shed 0.53% while the Shenzhen Component was 0.79% lower. The Chinese yuan weakened past 7.25-levels against the U.S. dollar after its latest economic data release. The Nikkei 225 in Japan lost 0.56% to end the session at 27,716.43 and the Topix shed 0.41% to close at 1,949.49, while the Kospi in South Korea gained 1.06% to close at 2,424.41. In Australia, the S&P/ASX 200 rose 0.58% to end its session at 6,999.3. Oil prices slipped on Wednesday after industry data showed that U.S. crude stockpiles rose more than expected and on concerns that a rebound in COVID-19 cases in top importer China would hurt fuel demand. Brent crude futures fell 74 cents, or 0.7%, to $94.62 a barrel by 1201 GMT, while U.S. West Texas Intermediate (WTI) crude futures fell 76 cents, or 0.8%, to $88.15 a barrel. The benchmarks fell around 3% on Tuesday. U.S. crude oil inventories rose by about 5.6 million barrels for the week ended Nov. 4, according to market sources citing American Petroleum Institute figures, while seven analysts polled by Reuters estimated on average that crude inventories would rise by about 1.4 million barrels. Gold prices, on Wednesday, eased off the one-month peak hit in the previous session, as the dollar edged up, although investors held off on big bets ahead of U.S. inflation data later this week that could steer the Federal Reserve’s rate hike strategy. Spot gold inched 0.2% lower to $1,708.57 per ounce by 1054 GMT, while U.S. gold futures eased 0.3% to $1,711.50. Bullion prices rose more than 2% to breach the key $1,700 level on Tuesday.