November 5, 2018 / 9:54 PM / in 12 days

GLOBAL MARKETS-U.S. stocks edge higher ahead of midterms, Fed; dollar falls

* Sterling up on Brexit deal hopes as dollar retreats

* Brent crude oil rises with Iran sanctions

* U.S. bond yields fall before elections

* World shares flat (Adds Wall Street close, updates throughout)

By Hilary Russ

NEW YORK, Nov 5 (Reuters) - Energy and financial stocks pushed U.S. equities higher on Monday, on the eve of U.S. midterm elections to determine whether President Donald Trump’s Republican Party retains control of the U.S. Congress and ahead of a meeting of Federal Reserve policy makers.

Choppy trading in oil left prices mixed after five days of heavy losses as the United States imposed a range of sanctions aimed at curbing oil exports by Iran.

Iran sanctions lifted oil prices for much of the day, boosting many U.S. shares. But the Nasdaq index fell, pressured by slumping shares of Apple and Amazon. Nikkei reported Apple has told two smartphone assemblers to halt plans for additional production lines dedicated to the lower-cost iPhone XR.

Investors were also cautious ahead of the U.S. midterm elections. Opinion polls show the Democratic Party could win control of the House of Representatives after two years of wielding no practical political power in Washington, with Republicans likely to hold the Senate.

“What’s spooking the market is not Congress or Senate,” said Gregory Perdon, co-chief investment officer at Arbuthnot Latham, “what’s spooking the market is the volatility of Trump,” which might not be tempered by any change in Congress.

The Dow Jones Industrial Average {.DJI;NETCHNG_1,PCTCHNG;[F1<0]fell -F1 points, or -F2 percent,[F1>0]rose F1 points, or F2 percent, remained unchanged} to {.DJI;TRDPRC_1}, the S&P 500 {.SPX;NETCHNG_1,PCTCHNG:2;[F1<0]lost -F1 points, or -F2 percent,[F1>0]gained F1 points, or F2 percent, remained unchanged} to {.SPX;TRDPRC_1} and the Nasdaq Composite {.IXIC;NETCHNG_1:2,PCTCHNG;[F1<0]dropped -F1 points, or -F2 percent,[F1>0]added F1 points, or F2 percent, remained unchanged} to {.IXIC;TRDPRC_1:2}.

The pan-European STOXX 600 index {.STOXX;PCTCHNG:2;[F1>0]rose F1[F1<0]lost -F1} percent and MSCI’s gauge of stocks across the globe {.MIWD00000PUS;PCTCHNG:2;[F1>0]gained F1[F1<0]shed -F1} percent.

Emerging market stocks {.MSCIEF;PCTCHNG:2;[F1>0]rose F1[F1<0]lost -F1} percent.

Oil prices fell, despite Washington’s temporary exemption to eight countries allowing them to keep buying Iranian oil amid sanctions.

U.S. crude {CLc1;PCTCHNG;[F1<0]fell -F1 percent to[F1>0]rose F1 percent to was unchanged at} ${CLc1;PRIMACT_1:2} per barrel and Brent was last at ${LCOc1;TRDPRC_1:2}, {LCOc1;PCTCHNG;[F1<0]down -F1 percent [F1>0]up F1 percent flat} on the day.

U.S. Treasury yields were lower as investors covered short positions ahead of midterm elections and braced for $83 billion worth of government debt supply tied to the November refunding this week.

With the Federal Reserve meeting on Wednesday and Thursday, investors were also concerned about prospects for tighter U.S. monetary policy after strong economic data.

Benchmark 10-year notes last {US10YT=RR;NETCHNG_1*32:0;[F1>0] rose F1 [F1<0] fell -F1}/32 in price to yield {US10YT=RR;RT_YIELD_1} percent, from {US10YT=RR;HST_CLSYLD} percent late on Friday.

The 30-year bond last {US30YT=RR;NETCHNG_1*32:0;[F1>0] rose F1 [F1<0] fell -F1}/32 in price to yield {US30YT=RR;RT_YIELD_1} percent, from {US30YT=RR;HST_CLSYLD} percent late on Friday.

BREXIT HOPES BOOST STERLING

Sterling touched a two-week high against the U.S. dollar then pared gains to trade at $1.3048, up 0.60 percent. The British currency got a boost from a Sunday Times report that an all-UK customs deal will be written into an agreement governing Britain’s withdrawal from the European Union.

The U.S. dollar softened against a basket of major currencies as investors, cautious ahead of the elections, took profits after three straight weeks of gains.

The dollar index {.DXY;PCTCHNG;[F1<0]fell -F1 percent[F1>0]rose F1 percent was flat}, with the euro {EUR=;PCTCHNG;[F1<0]down -F1 percent to[F1>0]up F1 percent to unchanged at} ${EUR=;PRIMACT_1}. Analysts cited pre-election caution after the greenback has rallied more than 7 percent from April lows.

“Much of Trump’s pro-growth, pro-markets agenda has arguably been enacted in the first two years of his presidency while he’s had the backing of both the House and Senate,” said Craig Erlam, senior market analyst at Oanda.

Reporting by Rodrigo Campos, Kate Duguid and Richard Leong in New York, Sruthi Shankar in Bengaluru and Christopher Johnson in London Editing by Alistair Bell and David Gregorio

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