After a positive start, the pan-European Stoxx 600 slid 0.3% by the close to 509.21, having now dropped in four of the past five sessions
European stocks lost steam on Monday afternoon as earlier gains faded and markets turned red ahead of Tuesday’s US presidential election.
After a positive start, the pan-European Stoxx 600 slid 0.3% by the close to 509.21, having now dropped in four of the past five sessions. Indices across Paris, Frankfurt, Milan and Madrid were all down, while London’s FTSE 100 outperformed with a gain of just 0.1%.
Wall Street’s benchmarks opened mixed but had quickly turned negative by midday in New York, as investors reduced their appetite for risk ahead of Tuesday, which has the potential to cause big swings in the equity, currency and bond markets.
While polls are still yet to identify a clear favourite, financial markets have been pricing in a win by former president Donald Trump, with the ‘Trump trade’ – a stronger dollar, weaker bonds and stronger crypto – having performed well in recent weeks.
However, the Trump trade was slowly unwinding on Monday as investors scaled back positions, with 10-year US Treasury yield plunging 10 bps and the US dollar index declined 0.4%.
Meanwhile, oil prices soared on Monday on the back of concerns about Iran’s response to continued Israeli strikes, along with the decision by OPEC+ to delay planned output hikes by a month. Brent crude was 2.4% higher at $74.88 a barrel by the close in Europe.
In economic data, the S&P Global-HCOB eurozone manufacturing purchasing mangers’ index improved to 46.0 last month, up from 45.0 in September and the highest level hit in five months. Nevertheless, the index still remained firmly in negative territory, coming in below the neutral 50-point mark for the 28th consecutive month.
Meanwhile, investor sentiment in the eurozone improved for the second month running in November, with the Sentix Investor Confidence index rising to -12.8 from -13.8 in October. However, despite the improvement month-on-month, Sentix said that “no positive turnaround scenario can be derived” from the data.
