Oct 29, 2018, by Lorcan Roche Kelly
Jair Bolsonaro received a call from President Donald Trump to congratulate him on his victory in yesterday’s Brazilian presidential election. Bolsonaro, a former army captain, who campaigned on a right-wing platform of privatizations, liberal gun laws and security won more than 55 percent of second round votes. Market reaction to the result has been positive, with a Japanese ETF that tracks Brazilian stocks jumping 14 percent in the immediate aftermath.
Donald Trump remained on the campaign trail in the wake of the mass shooting at a synagogue in Pittsburgh that left 11 people dead on Saturday. While he did promise to “tone it down a little,” the decision to go ahead with an event in Indianapolis may point to the pressure the GOP is under in the midterm elections next week. Veteran emerging-market investor Mark Mobius said that a Democratic Party majority in the House of Representatives would help push U.S. stocks into a bear market as investors re-allocate to the rest of the world. The Federal Reserve would be unlikely to help if stocks fall unless things get very bad indeed, Morgan Stanley’s cross-asset strategy team warned.
End of an era
German Chancellor Angela Merkel will quit as head of her Christian Democratic party after nearly two decades at the helm, telling a leadership meeting of her party that she won’t run again for the party chairmanship at a convention in December, according to a person familiar with the matter. After leading her country for 13 years, attention is turning to who will succeed her as head of Germany’s largest party, and possibly, in time, as leader of Germany. There is no indication that Merkel intends to stand down as Chancellor.
Overnight, the MSCI Asia Pacific Index slipped 0.2 percent while Japan’s Topix closed 0.4 percent lower as shares in the region reversed early session gains. In Europe, the Stoxx 600 Index was 1 percent higher at 5:50 a.m. as the region’s banks led gains on the back of good results from HSBC Holdings Plc. S&P 500 futures pointed to a gain at the open, the 10-year Treasury yield was at 3.081 percent and gold dropped.
At 11:30 a.m. Eastern Time U.K. Chancellor of the Exchequer Philip Hammond will deliver his budget to parliament. All of the plans he is set to announce will likely be reliant on the country securing a deal on Britain’s exit from the European Union. Hammond said in an interview that the U.K. would need a new budget with a new strategy should the country leave without a deal. That caveat aside, there are some sectors such as retail and banking that may be set to benefit from measures announced today.