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US midterm election results hit markets as the red wave fails to materialise


US equities were sharply lower in Wednesday trading, ending near session lows. The S&P and Nasdaq finished lower, erasing gains accumulated over the past three sessions.

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All eyes were on the midterm US election results. Joe Biden and the Democrats have avoided sweeping defeats but still risk losing control of Congress to the Republicans after election results showed Americans are unwilling to hand a strong political mandate to either party. The outcome of the vote was a comfort to Biden but dealt a blow to the presidential ambitions of Donald Trump, who was counting on victories by Republican candidates he endorsed to power a new run for the White House in 2024.

While election results are still uncertain the red wave that models, investors, and betting markets anticipated did not materialise, and near-term, that will add to already elevated volatility. 

Markets will now look to Thursday’s CPI data for more news on the inflation front.

The Dow Jones Industrial Average fell 2 per cent. The decline was led by Disney, which fell more than 13 per cent after the entertainment giant missed analyst estimates on the top and bottom lines. The S&P 500 shed 2.1 per cent, and the Nasdaq Composite slid 2.5 per cent.

Stocks fell to session lows during Wednesday afternoon trading as the price of bitcoin dropped to its lowest levels in roughly two years, weighing on overall risk sentiment and dragging down the tech sector.

The WSJ has reported Binance walked away from the rescue of crypto exchange FTX, adding more turmoil to the broader crypto market. Bitcoin futures were down 9.5 per cent, holding below $17k. 

In company news, Elon Musk has sold billions more in Tesla stock to pay for his Twitter deal, selling nearly $4 billion worth of shares in recent days, according to regulatory filings, bringing his total sales for the year to $36 billion. 

And Facebook’s owner Meta will lay off 11,000 employees, equivalent to 13 percent of its work force, the company announced overnight, in the biggest restructuring in the social media giant’s history. A slump in digital advertising and ballooning losses from its pivot to the metaverse have pushed the company to make a series of wide-ranging cuts.

Affirm shares plunged 22 per cent after the so-called buy now, pay later company posted a wider-than-expected loss for its fiscal 2023 first quarter. Investors are paying close attention to Affirm’s earnings as they should offer clues to the health of the consumer amid challenging macroeconomic conditions.

Across the sectors, no sector was spared overnight with Energy hit the hardest. The selloff came as markets had expected the Republicans to take power, which would have been favourable for ‘dirty energy’.

Currencies

One Australian dollar at 8:20 AM has weakened compared to the US dollar yesterday, buying 64.27 US cents (Wed: 65.09 US cents), 56.63 Pence Sterling, 94.11 Yen and 64.21 Euro cents.

Commodities

Iron ore is 0.6 per cent higher at US$89.55 tonne.

Iron ore futures are pointing to a 1.2 per cent fall.

Gold lost $6.90 or 0.4 per cent to US$1709.10 an ounce.

Silver dropped $0.39 or 1.8 per cent to US$21.11 an ounce.

Copper lost $0.95 or 0.3 per cent to US$367.30 a pound.

Oil fell $3.29 or 3.7 per cent to US$85.62 a barrel.

Futures

The SPI futures are pointing to a 0.9 per cent fall.

Figures around the globe

Across the Atlantic, European markets closed lower. Paris fell 0.2 per cent, Frankfurt lost 0.2 per cent and London’s FTSE closed 0.1 per cent lower.

In Asian markets, Tokyo’s Nikkei lost 0.6 per cent, Hong Kong’s Hang Seng fell 1.2 per cent and China’s Shanghai Composite closed 0.5 per cent lower..

Yesterday, the Australian sharemarket gained 0.6 per cent to close at 6999.

Ex-dividends

Acorn Capital Investment Fund (ASX:ACQ) is paying 4.25 cents fully franked. 

Dividends payable

McMillan Shakespeare (ASX:MMS)
Dexus Industria REIT (ASX:DXI)
Dexus Convenience Retail REIT (ASX:DXC)

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.






Image & Story Credit: finnewsnetwork.com.au

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