Market movers today
The US midterm election results are in and as expected, we got a divided US Congress. We think the outcome will only have limited implications for the economy and markets, see US mid-term elections – Divided Congress means no changes to economic policy , 7 November.
In Sweden , we get Prospera inflation expectations at 08:00 CET and budget figures at 09:30 CET. In Norway, we get manufacturing production in September at 08:00 CET. For more see page 2.
EIA is set to publish its weekly US inventory report today. The market will be positioned for a rise in stocks after the weekly report from API showed a rise of 7.8mb in crude stocks last week.
Selected market news
The US mid-term elections are now over and the result was more or less as expected with a divided Congress with the Democrats controlling the House of Representatives and the Republicans retaining control of the Senate. With a divided Congress, we should not expect changes to economic policy and hence we maintain our view that the implications for the economy and markets should be limited. US expansion is set to continue. Trump has criticised the Fed but it is likely to continue its hiking cycle by hiking once more this year and three times next year. Democrats likely to start impeachment process but Trump is unlikely to be convicted. We expect Trump to remain hawkish on foreign policy. Positive signs in US-China trade war lately with a 60% probability of a ceasefire.
The American Petroleum Institute reported yesterday that US crude stocks rose 7.8mb last week. It further helps to ease supply concerns in the oil market following the implementation of sanctions on Iran this week. Oil prices dropped yesterday, with the price on Brent crude falling to USD72/bbl.
UK Prime Minister Theresa May is said to be preparing a Brexit deal draft proposal to be sent for approval in the Cabinet within days, which signals that the UK is readying its final proposal for a Brexit deal.
Peoples Bank of China (PBOC) governor Yi Gang said that monetary policy in China, judged by growth rate of M2 money supply, is neutral.
Bank of Japan’s (BoJ) board member Yukitoshi Funo said overnight that BoJ is not about to reduce its monetary easing since inflation is still distant from the central bank’s 2 % target.
