Written by Chibuike Ogwu and Amanda Cooper
NEW YORK/LONDON (Reuters) – Gold prices hit a record high on Wednesday, defying a rally in the dollar that kept pressure on the yen and euro, while investors placed big bets ahead of the U.S. presidential election. Amid this reluctance, global stocks fell slightly.
Investors are reconsidering how much the Federal Reserve needs to cut interest rates after the latest U.S. economic data showed the economy continuing to expand and create jobs.
The market has priced in a 92% chance that the next FOMC meeting will cut rates by 25 basis points in November, and another 25 basis points by the end of the year. A month ago, traders were pricing in rate cuts of up to a percentage point through January. The yield on the benchmark 10-year U.S. Treasury note hit its highest level in three months, most recently rising 3.8 basis points to 4.244%.
“The rise in yields suggests we may have a pro-growth administration, and there are concerns about deficit spending,” said Thomas Hayes, chairman of Great Hill Capital in New York.
On Wall Street, all three major indexes fell, with declines in consumer staples, health care and technology stocks.
The Dow Jones Industrial Average fell 0.52% to $42,700.16, the S&P 500 fell 0.36% to $5,830.00, and the Nasdaq Composite Index fell 0.56% to $18,469.35.
On the day, the MSCI All World Index fell by 0.41%, reflecting the weakness in European markets, where the STOXX600 index fell by 0.06%.
“This week’s stock market price movements suggest that with the U.S. presidential election just around the corner, it may be difficult for the S&P 500 to break its 50th all-time high,” said Kathleen Brooks, director of research at XTB. It suggests that.”
Donald Trump’s chances of defeating Kamala Harris have been creeping up on betting sites lately, but polls show the race for the White House is still too close to call.
Investors are focused on the possibility of Trump becoming president again, as his policies, including tariffs and restrictions on illegal immigration, are expected to push up inflation.
“There’s an illusion that if Trump wins, you’ll want to buy energy. In fact, from 2016 to 2020, energy underperformed. The things that outperformed, and the things people should buy on that basis, are Boeing and small-cap stocks. And believe it or not, emerging markets and Chinese stocks,” Hayes added.
Gold shrugged off the strength of the US dollar and rose to a new record high of $2,757.99 per ounce. Demand for gold, a safe-haven asset, is being driven in part by U.S. election concerns and geopolitical tensions in the Middle East and Europe.
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Bullion, which has risen 33% this year, was most recently down 0.8% to $2,726.51 an ounce. US gold futures fell 0.1% to $2,741.50 an ounce.
The U.S. dollar index against a basket of currencies including the yen and euro rose 0.37% to 104.48.
The dollar rose 1.34% against the Japanese yen to 153.08 yen. The euro fell 0.2% to $1.0775, its lowest since early August.
Goldman Sachs said in a note on Tuesday that the euro could fall by as much as 10% in a scenario in which President Trump introduces high tariffs and tax cuts.
Brent crude oil futures fell 1.14% to $75.17 per barrel. West Texas Intermediate crude oil fell 1.13% to $70.93.
(Reporting by Chibuike Oguh and Amanda Cooper in New York; Editing by Rod Nickel. Click here to read Reuters markets and financial news. https://www.reuters.com/finance/markets Asian stock markets Click here for the status) 🙂
