RECAP: for the week ending November 4th 2016
The S&P fell for its 9th consecutive session on Friday – the first such loss since 1980. Uncertainty surrounding the upcoming election seemed to weigh on sentiment. Polling results early in the week showing that Donald Trump was closing the gap with Hillary Clinton seemed to unsettle markets—whether because of an overall investor preference for Clinton’s agenda, worries about a contested election, or simply heightened political uncertainty. The firm’s traders noted that market anxiety picked up Tuesday, in particular, following the release of a tracking poll showing Trump slightly ahead in the race. The recent precedent set by Brexit of a surprise election outcome that sent markets plunging may have been on the minds of many investors. he week’s economic data were generally positive. Personal income and consumer spending both recorded healthy gains in September. The mostly closely watched figure, Friday’s nonfarm payrolls number, slightly missed consensus expectations.
In Europe, shares fell for the week, with the pan-European benchmark Stoxx Europe 600 on Wednesday sinking to its lowest level in more than three months. The decline in European equities was in tandem with a general global sell-off as polls showed the U.S. presidential race tightening. For the week, banking, automotive, and energy stocks logged some of the biggest drops. The UK High Court ruled that Prime Minister Theresa May must first gain Parliament’s approval before starting the Brexit process, known as Article 50. The UK government quickly appealed the case to its Supreme Court. May said on Friday that the ruling would not stop her plan to begin the two-year window for negotiating the exit from the European Union in late March. The UK pound had already been rising during the week, but the High Court decision lifted the currency to a nearly four-week high against the U.S. dollar and the euro. The euro continued to strengthen through the end of the week
In Asia, the BOJ left policy rates unchanged this week and, once again, pushed back the timing for hitting its 2% inflation target by as much as a year, into fiscal 2018. The bank kept its target for the 10-year government bond yield at 0.0% and maintained short-term interest rates at -0.1%. BoJ Governor Haruhiko Kuroda signaled that the central bank’s massive asset purchases will continue to focus on government bonds, saying it was difficult to buy municipal bonds given the fairly small market for them. Japanese stocks fell as investors bought yen as a safe-haven asset. On the week, the TOPIX 100 fell 1.6% to close at 872.61, and the Nikkei 225 fell 3.1% and closed at 16,905.36. Over that span, the Nikkei Volatility Index surged 41%, in part because investors are nervous about the outcome of the U.S. presidential election.