NEW YORK – Global equity markets moved higher Monday after last week's painful worldwide sell-off, with attention focused on the US presidential election against a backdrop of rising coronavirus infections there and in Europe.
After a hesitant start, Europe rebounded sharply as dealers shrugged off a growing number of virus lockdowns in the region, though analysts cautioned against complacency.
That was followed by a relatively placid session on Wall Street, where markets moved past last week's rout that culminated in both the worst week and month since March.
The Dow finished up 1.6%, led by energy and industrial equities that are expected to benefit from an economic recovery.
Oil prices turned higher after days of losses on worries about demand as traders hoped that the OPEC cartel and its allies might hold off on planned production increases.
'Encouraging rebound'
"It's an encouraging rebound that we are seeing – but I am not getting carried away yet," Oanda analyst Craig Erlam told AFP.
"There are so many major risk events over the next few days," he warned, adding that a contested US vote would be "the worst possible outcome."
Besides the election, this week's US calendar includes a Federal Reserve meeting and the October employment report.
Polls show challenger Joe Biden leading President Donald Trump, but political analysts say a Trump victory is still possible and the final outcome may not be clear on Tuesday night or even on Wednesday.
A win by Biden and a Democratic takeover of the Senate could position the United States to enact a generous fiscal stimulus package, which would be positive for stocks. But such an outcome would also increase the odds of higher corporate taxes, a headwind for Wall Street.
Analysts attributed Monday's gains on to bargain-hunting after the October pullback, rather than to pre-election manoeuvring.
"We had stretched to the downside," said Art Hogan, chief market strategist at National Securities, who added that the gains were propelled by sectors connected to an economic recovery such as energy and industrials.
After months of rallying from March lows, equities were brought to a juddering halt in October as virus cases surged, forcing European governments to re-impose tough lockdown measures that plunged a tentative economic rebound into chaos.
British Prime Minister Boris Johnson over the weekend said England would implement a four-week lockdown from Thursday to temper a second wave, following similar measures taken by Austria, France, Greece, Ireland and Portugal.
Germany, Italy and Spain are also enforcing stricter containment measures. – The Vibes, November 3, 2020
.jpg)
