I. Performance and Valuation of Global Equity Indices
Data source: Bloomberg, 2024/10/28-2024/11/03, compiled by Tiger Brokers
II. Key Market Themes
i. Trump’s Odds Decline, U.S. Election Uncertainty Remains – Watch Out for Market Panic
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This week, the results of the U.S. election are about to be announced. Just a few days ago, the market believed that Trump was almost guaranteed to win, but multiple polls released over the weekend show that the Democratic Party currently holds an advantage in several swing states. As a result, Trump’s odds on Polymarket plummeted from 66% last week to as low as 54%. On some other platforms, Harris's support rate has even surpassed Trump's, leaving the suspense of this election until the last moment.
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The capital markets quickly reacted as well, with Trump Media & Technology Group (DJT) $特朗普媒体科技集团(DJT)$ dropping over 20% in just one week. However, it’s important to note that if the election remains too close, leading to an extended announcement of the final vote results, it could cause significant volatility in the stock market. Similar situations occurred in 1876 and 2000, which led to declines in the following months to half a year.
ii. U.S. Economic Data Shows Divergent Trends—Is Recession Trading Making a Comeback?
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This week, multiple U.S. economic data points fell short of expectations. Notably, October's non-farm payrolls added only 12,000 jobs, marking the worst performance in nearly three years and significantly below market expectations. At the same time, the ISM Manufacturing PMI registered at 46.5, remaining below expectations for several consecutive months and continuing to stay below the neutral line.
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Interestingly, despite the consecutive disappointing economic data, the market has not sparked concerns about a recession. On one hand, the non-farm payroll figures were significantly impacted by the dual hurricanes, and the unemployment rate released on the same day remained steady at 4.1%, in line with expectations. On the other hand, indicators closely related to consumption, such as wage growth, household income growth, and consumer spending growth, all exceeded expectations.
Data source: Bloomberg, compiled by Tiger Brokers
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Overall, although the recent non-farm payroll data fell short of expectations, it was primarily due to temporary factors such as weather conditions. While the manufacturing PMI is sluggish, it has not yet translated into a decline in business confidence or household income. We believe that the recent contrasting economic data is quite nuanced. It has dampened the market’s previous over-optimism about the economy without being severe enough to induce panic. The current pace aligns closely with the Federal Reserve's expectations, making this week’s FOMC rate cut of 25 basis points almost certain, and Powell's guidance on rate cuts for next year will be the next point of interest.
Data source: CME Group, compiled by Tiger Brokers
Disclaimer
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