Markets will be watching today’s second US Presidential debate after the dramatic weekend that saw large parts of Donald Trump’s Republican Party reject its candidate.
Three days of gathering controversy over lewd comments Trump made years ago, which surfaced in a Washington Post story on Friday, and then more bad taste comments taken from radio interviews in New York a decade or so ago, saw many leading Republicans urge Trump to resign as the party’s candidate against Hiliary Clinton.
Trump half apologised for the remarks, but said he would continue in the race until the election less than a month away.
The storm of controversy has made today’s second debate (Noon, East Coast Time), even more important and more than the 84 million who watched the first debate, are expected to watch in the US, with millions more around the globe.
If Trump was to be forced out, it would be unprecedented and would trigger volatility in the markets. As it is the US markets will be on a part holiday watch today and tonight for the Columbus Day holiday.
US sharemarkets are open, commodities will be traded, but the bond market is supposed to be closed, but that still won’t stop trading happening in Asia and Europe, especially if the debate sees more controversy.
Don’t be surprised if gold picks up after the worst weak for nearly three years last week, and the Aussie market’s small gain in futures trading Friday night won’t necessarily be a good guide to the way trading goes today here and in Asia and on into Europe.
Friday trading saw Eurozone shares lose 0.9% and the US S&P 500 off 0.3% as reasonable September jobs growth in the US kept the Fed on track for a December rate rise.
ASX 200 futures rose 0.1% and the Australian share market should start with a modest rise, but the events in the US elections are rapid moving and will have to be watched.
The ASX 200 and the All Ordinaries Index each fell 0.3% on Friday, but still managed to close up 0.6 and 0.4% higher for the week 5,467.4 points and 5,548.5 points.
US shares were down 0.7% and Eurozone shares down 0.1%. Japanese shares ended up a solid 2.5% and Chinese markets were closed for national holidays all week.
Bond yields rebounded on ECB taper talk and increasing expectations for a December Fed rate hike. As a result of the latter the $US rose and appears to be looking to move higher which pushed the $A lower – it finished around 75.80 US cents.
US non-farm payrolls growth of 156,000 in September told us that the US jobs market remains solid and the Fed is still on track for a December rate.
Rising labour force participation which pushed the unemployment rate up to 5% with 400,000 extra people looking for work, showed us that there is still spare capacity in the US labour market.
US wages growth remains slow, and there is nothing in the monthly reading of inflation to signal any looming breakout.
The S&P 500 index fell 7.03 points, or 0.3%, to close at 2,153.74 on Friday to be down 0.7% for the week; the Dow lost 28.01 points, or 0.2%, to finish at 18,240.49 for a weekly loss of 0.4% and the Nasdaq Composite eased 14.45 points, or 0.3%, to close at 5,292.40, falling 0.4% for the week.
The weekly drop for the market marks the first retreat after three straight weeks of gains.
