Global markets faced a turbulent week as the US dollar slipped on lower Treasury yields and mixed Asian stock performance reflected uncertainty ahead of Japan’s election. Investors are keeping a close watch on key US payroll data and tech earnings due in early November, as well as the upcoming US presidential election. Meanwhile, rising bond yields and tensions in the Middle East are driving up oil prices and demand for safe-haven assets like gold.
Dollar weakens following Treasury yield drop from recent highs
The US dollar softened after experiencing its steepest one-day drop in a month, largely reflecting a decline in US Treasury yields from recent three-month highs.
The 10-year yield slipped to 4.19%, retreating from its earlier peak of 4.26% this week. Although the dollar pulled back on Friday, it remains poised for a fourth consecutive weekly gain, buoyed by unexpectedly robust US economic data.
The 10-year U.S. Treasury note has fallen from 114.99 to 111.38 with weak momentum as seen on the VT Markets app.
Investor caution persists as markets await the Federal Reserve’s upcoming policy direction, with an important payroll report scheduled for release on 1 November, followed shortly by the US presidential election on 5 November.
Asian markets mixed; Nikkei down 1%, Hong Kong and Taiwan edging higher
Asian markets presented a mixed outlook, with Japan’s Nikkei index declining by 1% as of 0154 GMT. The yen staged a notable recovery from a three-week low against the dollar, putting added pressure on Japanese stocks ahead of the upcoming general election.
The election results could potentially alter the power balance within Japan’s ruling coalition, introducing heightened political risks for investors in the region.
Investor focus on major tech earnings amid bond yield impact
In the week ahead, market participants are turning their attention to the earnings releases from major tech giants, including Alphabet, Amazon, Meta, and Apple.
These reports will be instrumental in shaping market sentiment, especially for tech-heavy indices.
Additionally, rising bond yields continue to affect global equities, as reflected in the MSCI World Index’s 1.2% decline over the week.
Gold, often viewed as a safe-haven asset, is on track for its third straight weekly gain, currently trading at USD 2,729 per ounce, though it eased slightly on Friday.
Rising bond yields are weighing on stocks. It could be worse after the election https://t.co/3PTCampo0X
Crude oil prices are on course for a weekly gain as concerns over supply disruptions persist due to ongoing tensions in the Middle East.
Brent crude futures climbed 0.6% to USD 74.83 per barrel, with US West Texas Intermediate following at USD 70.62 per barrel. Oil traders remain vigilant as geopolitical factors continue to support elevated prices.
Meanwhile, as the US election nears, speculation over a potential Trump victory has added upward pressure on US yields and the dollar.
Trump’s economic stance, particularly his inclination towards inflationary tariffs and tax cuts, is expected to shape market expectations around inflation and interest rates.
Together, these economic and political dynamics are set to make the coming weeks pivotal for investors.
