Opening Bell: U.S. Futures Pop, Dollar Drops On Midterm Election Shift

Dollar slips, futures climb after Democrats win control of US Congress Yield on 10-year Treasurys eases after soaring on vote’s results WTI halts 7-day losing streak Key Events

The fell in tandem with US Treasurys, which took a temporary beating on Wednesday as investors pondered the potential repercussions of the US midterm election results. Futures on the , and , along with European shares climbed higher, shaking off weakness from the Asian session.

Investors initially rotated out of Treasurys, pushing yields on notes higher, after US Republicans lost control of the House of Representatives, making it more difficult for the Trump Administration to enact business-friendly fiscal measures. While the outcome of the US election was partly priced in by traders, the result has introduced uncertainty into markets that have benefited from the prospect business focused fiscal policies that might have also triggered higher yields. US yields eased by the European morning session.

DXY Hourly Chart

The greenback also took a hit from falling demand from foreign investors for USD-denominated Treasurys. The currency’s slide continued even as Treasury demand regained some ground.

The reached a three-day high, helped by some positive earnings reports as well as soaring Spanish bank stocks, after the Southern European country’s Supreme Court ruled that lending institutions will not be required to pay stamp duty on mortgages, thereby boosting prospects for profits.

Asian indices gave up early gains and closed mostly lower. Australia’s finished in positive territory, outperforming with a 0.37 percent gain, while China’s underperformed, losing 0.68 percent.

Global Financial Affairs

US investors took a wait-and-see approach yesterday, bracing for an adverse market reaction to a shift in the political equilibrium. Shares in both the Materials and Industrials sectors—the most sensitive to trade risk due to companies’ reliance on exports—outperformed.

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