NEW YORK, Nov 9 (Reuters) – Global stocks fell below fresh seven-week highs and the dollar rose on Wednesday as investors awaited the results of the U.S. mid-term elections. and key data on consumer prices that could impact Federal Reserve policy. on interest rates.
Bitcoin, the largest cryptocurrency by market value, fell 9.81% to $ 16,730.00 amid concerns about the stability of the sector after a “liquidity crunch” brought major exchange FTX in a potential agreement with the rival Binance.
The Wall Street Journal reported that Binance would likely walk away from the deal, citing a source familiar with the situation.
Stocks in Europe and on Wall Street fell. Neither the Democrats nor the Republicans were likely to gain control of both houses of Congress, which clouded the outlook for fiscal spending and regulation.
“The market is going to get what it wants: it is going to get a divided government. It means that gridlock is the item on the agenda for the next two years,” said Anthony Saglimbene, chief market strategist at Ameriprise Financial in Troy, Michigan.
“It’s not going to seriously change spending, but it’s also going to block any material increase in spending,” he said.
Stock markets tend to do better under a divided government when a Democrat is in the White House.
Average annual returns of the S&P 500 have been 14% in a split Congress and 13% in a Republican-controlled Congress under a Democratic president, according to data from 1932 analyzed by RBC Capital Markets. That compares with 10% when Democrats controlled the presidency and Congress.
Asian stocks (.MIAPJ0000PUS) rose as election results were in overnight. But MSCI’s world index (.MIWD00000PUS) lost 1.41% and the pan-European STOXX 600 index (.STOXX) closed down 0.30%.
On Wall Street, the Dow Jones Industrial Average (.DJI) fell 1.6%, the S&P 500 (.SPX) slid 1.74% and the Nasdaq Composite (.IXIC) fell 2.16%.
Walt Disney ( DIS.N ) fell 12.54% after the entertainment heavyweight reported further losses from its push into streaming video, while Meta Platforms Inc ( META.O ) gained 5.70% after the Facebook parent said it would cut 13% of its workforce.
Investors applauded Meta’s decision to cut spending, but a weak advertising market for the company points to a difficult economic outlook as the Fed raises rates to tame high inflation.
Data on the US consumer price index (CPI) is due on Thursday, with economists polled by Reuters predicting a drop in the core monthly and annual numbers for October to 0.5% and 6.5%. , respectively.
Many in the market believe that the central bank of the United States may reduce its target lending rate if the data shows a decrease in inflation, but others see it moving “higher for more” as the Fed chairman Jerome Powell indicated last week.
“I take President Powell at his word. He has told the markets all along that he needs to raise rates, which suggests to me that there are a number of rate hikes still in the works from the Fed,” said Michael Arone, chief investment strategist. at State Street Global Advisors in Boston.
“Clearly investors are hoping that the rate of inflation starts to turn around, and if that doesn’t happen, I think that causes some additional volatility in the markets,” he said.
Federal funds futures show the Fed’s target rate will peak at 5.096% next June, indicating that policymakers will have to raise rates by more than 125 basis points from their current range of 3.75% -4.0%
The euro was lower, 0.65% at $1.0007, just outside the $1.0096 hit overnight, its highest since September 13.
The yen weakened 0.61% against the dollar to 146.59, after weakening overnight to 145.17, its lowest level against the Japanese currency this month.
The yield on 10-year Treasury notes was up 2.3 basis points to 4.151%.
Oil prices sank after industry data showed U.S. crude stockpiles rose more than expected and on concerns that a rebound in COVID-19 cases in the top importer China would hurt the demand for fuel.
US crude futures fell $3.08 to settle at $85.83 a barrel and Brent futures settled $2.71 at $92.65.
Gold fell as a rising dollar pushed up bullion prices by more than a month.
US gold futures settled 0.1% lower at $1,713.70.
Reporting by Herbert Lash, additional reporting by Dhara Ranasinghe, Nell Mackenzie and Lucy Raitano in London, Ankur Banerjee in Singapore; Edited by Toby Chopra, Bernadette Baum, Deepa Babington and Alex Richardson
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