Global markets cautious as investors ‘wait and see’ ahead of US elections

By Sevgi Ceren Gokkoyun

NEW YORK (AA) – Global markets are cautious, seeking direction as macroeconomic data and corporate earnings were released last week.

Investors have adopted a “wait-and-see” stance ahead of the upcoming US presidential elections, with ongoing geopolitical tensions in the Middle East further influencing risk sentiment.

These uncertainties have bolstered demand for the US dollar, as markets anticipate a potential rate cut by the Federal Reserve at its November meeting.

US 10 Year Futures bond yields also climbed, reaching 4.26% last week, the highest since July and surpassing 4.30% this week.

Last week, global stock indices recorded losses: the Dow Jones fell 2.7%, as did Europe’s Stoxx 600 to 1%, and Japan’s Nikkei 225 to 2.8%. Gold, viewed as a safe haven amid global uncertainty, surged to a record $2,770 per troy ounce (31.1 grams).

Markets are now focused on third quarter growth, personal consumption, and labor data due this week.

As the Nov. 5 election approaches, the result will impact both US and global market stability. Republican candidate Donald Trump has pledged to impose new tariffs, cut taxes, and increase fossil fuel production, while Democratic candidate Vice President Kamala Harris proposes reducing costs and taxes for the middle class, a continuation of President Joe Biden’s policies.

Neither candidate holds a decisive lead in swing states, making predictions difficult. Previous elections have shown that US presidential races influence investor decisions, with the 2020 elections causing sharp market fluctuations. Similar impacts are anticipated this year.

Market volatility is expected to rise as the elections near, and analysts suggest results may be delayed due to potential recounts or legal disputes.

Analysts warn that a close race with a contested outcome poses a significant economic risk, as prolonged political drama in the US could have serious repercussions domestically and globally.

While some analysts believe a Trump win on Nov. 5 might lead to stock market gains, others argue it could fuel inflation, restricting the Fed’s monetary easing options.

Post-election, analysts expect markets to stabilize as election-related uncertainties subside.

Global market movements are also influenced by expectations of a soft economic landing, policy easing by central banks, corporate earnings, and ongoing geopolitical tensions. Experts advise focusing on long-term fundamentals rather than reacting solely to election outcomes.

*Writing by Emir Yildirim in Istanbul