【TOP 1 Evening】Gold muted on firmer dollar, Wall Street faces 20% fall with a contested election

Gold

Gold prices lingered near the one-month low hit in the previous session on Friday, as the dollar strengthened and hopes of an immediate U.S. coronavirus aid package waned.

Spot gold rose0.46% to $1875.45 per ounce by 18:00 (GMT+8).

"Leading into the U.S. elections, I see gold staying weak," said Michael Langford, executive director at corporate advisory and consultancy firm AirGuide.

But "regardless of whoever wins the election, there is going to be some form of stimulus program and that's positive for gold."   

U.S. polls show Democratic contender Joe Biden with a significant edge nationally, but with a tighter lead in battleground states that can decide the election.        

Elsewhere, by 19:00 (GMT+8), Silver rose 0.86% to $23.409 per ounce, platinum was up 1.78% to $854.56 per ounce, while palladium rose 1.33% to $2217.51 per ounce.

Forex

The dollar paused its climb on Friday.

At 18:00 (GMT+8), the U.S. dollar index was down 0.12% to 93.870.

Overnight, the euro's decline in addition to U.S. data helped lift the greenback to a near four-week high against a basket of currencies.

At 18:00 (GMT+8), the EUR/USD fell 0.03% to 1.1668; the GBP/USD fell 0.02% to 1.2921, the AUD/USD rose 0.01% to 0.7029; the USD/JPY fell 0.27% to 104.303.

The European Central Bank committed on Thursday to take new action in December to contain the growing fallout from the second wave of coronavirus infections, likely in the form of more bond purchases or cheap credit for banks.

Crude Oil

Global oil prices edged up on Friday but are on track for a second monthly fall on growing concerns that the rise in COVID-19 cases in Europe and the United States could hurt fuel consumption.

U.S. West Texas Intermediate (WTI) crude was at $36.575 barrel, rose 1.13%, Brent was up to $38.525 a barrel, rose 1.19% by 18:00 (GMT+8).

" It looks like a dead cat bounce at this stage," said Jeffrey Halley, senior market analyst, Asia Pacific, OANDA in Singapore." With a European slowdown jeopardising global consumption and the return of Libyan production, the onus must now fall on OPEC+ to reconsider their 2 million barrel per day production increases in January."

He added that oil prices are unlikely to sustain any rally in this environment short of a statement from OPEC+.

The Organization of the Petroleum Exporting Countries and their allies, including Russia, a group known as OPEC+, are expected to raise their output by 2 million bpd in January as part of their production agreement.

"The GDP numbers suggest that there is an end to this situation, that all the news is not going to be negative and at least to some degree we're seeing economic recovery," said Michael Lynch, president of Strategic Energy & Economic Research. On the other hand, "all the Covid news seems to be that we're shutting down, we're increasing restrictions on behavior."

"The reasons for ebb and flow of risk appetite remain Covid-related, with the announcement of a return to stricter lockdown measures in Europe, notably France and Germany," said Harry Tchilinguirian, oil strategist at BNP Paribas S.A. "Add to that the all-but-vanished prospect of the fourth round of U.S. fiscal stimulus prior to the presidential election, and you have a recipe for macro pessimism that is reverberating across various assets today."

Stocks

Stocks in Asia-Pacific closed down on Friday trading.

In Japan, the Nikkei 225 fell 354.81 points or 1.52%, close at 22,977.13.

S&P/ASX 200 fell 32.70 points or 0.55% to close at 5,927.60.

South Korea's Kospi fell 59.52 points or 2.56% to 2,267.15.

Hang Seng Index fell 479.18 or 1.95% to 24,107.42.

The weighted index on the Taiwan Stock Exchange (TWSE), or Taiex, fell 116.57 points, or 0.92%, at 12,546.34. 

Markets want to see a clear victory for either President Donald Trump or Democratic nominee Joe Biden within a week of the November 3 election. If there's a contested outcome, stocks could slide as much as 20%.

That's according to a team of Bank of America economists and strategists led by U.S. economist Michelle Meyer and equity and quant strategist Savita Subramanian. A "landslide victory for either Trump or Biden and rapid election conclusion would likely be welcomed by markets, while a severely contested election could see risk-off and drive 10-year rates materially lower," they wrote in a research note.

"If Trump leads on Election Day with a large backlog of absentee and mail-in ballots, stocks could see more volatility until more results come in," the BofA analysts said.

If the count is close, with ballots in question and state recounts, investors may respond as they did during 2000, when the S&P 500 sold off 5% before the Supreme Court called the election for George W. Bush on December 12.

Declines will be sharper if either side refuses to accept the results, with the economy set for an "uncertainty shock" as confidence stumbles -- with businesses delaying hiring and investments, while households turn to precautionary saving -- and as doubts about fiscal stimulus mount.

Here's what BofA expects for stocks within two election outcomes:

Republican sweep would initially be positive (with little change to a gain of 5%), with beneficiaries including real estate, dividend-yielding stocks, restaurants, and services firms, while multinationals would lag.

Democratic sweep would be initially neutral (with a drop of as much as 5% to a gain of as much as 5%) and longer-term positive, with cyclicals and small caps benefiting while energy and luxury goods may be hurt.

By 18:00 (GMT+8):

SP500下跌0.79%，报3,277.3；

DJ30下跌0.64%，报26395.0；

TECH100下跌1.32%，报11,187.6；

GER30 下跌0.03%，报11579.1；

UK100 下跌0.39，报5563.5；

China A50下跌1.32%，报15,658.1；

Focus Tonight

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