Global markets, gold in positive territory as US awaits its next President

US futures surge over possible Trump return - Bitcoin sets new record high

Dubai: Global stock markets and investors seem to be showing no jitters - so far - as counting of votes for the next US President goes on briskly, with the US Dow closing strongly yesterday and most Asian stock markets in positive territory.

Meanwhile, Bitcoin prices have climbed to a new peak, of $74,000 plus.

The overnight rally in Dow futures is the one that investors will be closely monitoring for cues on who will be the next President-elect. "On Tuesday, US markets closed strong, with the Dow Jones Industrial Average rising 1.02%, the Nasdaq up 1.43%, and the S&P 500 gaining 1.23%," said Milan Vaishnav," said founder and technical analyst at Chartwizard.

Bond yields for the 2-year and 10-year held steady. In after-hours trading early Wednesday, Dow futures rose 73 points, S&P 500 futures edged up 0.1%, and Nasdaq 100 futures remained stable.

US futures

The Dow future is up by 580 points and the Nasdaq by 236 points as more votes are tallied and state by state results declared.

The betting market has favored a Trump win, as did Bitcoin that saw a steep single-day gain. Chinese stocks continued the rally from yesterday despite a fall in the yuan...- Junaid Ansari of Kamco Invest

By 7:30am UAE time, former President Donald Trump had 198 of the decisive Electoral College votes while VP Kamala Harris' tally is 112. (The winner will be decided based on who gets 270 of these votes.)

Stocks, the US dollar and yields on US treasury bonds were seen rising after early results showed Trump leading in the race to win the US Presidential election," said Junaid Ansari, Director of Investment Strategy and Research at Kuwait-based Kamco Invest. "The betting market has favored a Trump win, as did Bitcoin that saw a steep single-day gain. Chinese stocks continued the rally from yesterday despite a fall in the yuan. Both euro and yen declined against the dollar."

How will UAE stock market investors react?

Today, the final subscription numbers on the LuLu Retail IPO will be announced, along with the offer price range, which is most likely to be Dh2.04 a share. Yesterday, the DFM and ADX closed higher, albeit marginally. How the US election is playing out will be on investor minds when the markets open. "The UAE markets do feel the impact of global sentiments," said Arun John, Chief Market Analyst at Century Financial. "The uncertainty and volatility that comes with US elections may impact investor psychology and thereby trigger short-term turbulence in Gulf stock markets."

Gold prices are range-bound

Even gold prices, which has been through an extremely volatile phase in recent weeks, is sticking to a narrow range today, gaining around $1.69 to $2,735 an ounce by 7:40am. (The UAE gold rate for a 22K gram is Dh307.75. The highest in the last 10 days was Dh311 25.)

If Trump clinches the election and a 'red wave' unfolds, this legislative and fiscal ease could significantly hinder export-driven economies like China, where growth forecasts may be hit hard, putting selling pressure on Chinese equities and the yuan.- Dilin Wu of Pepperstone

But investors will need to keep playing close attention with the outcome of the US election showing all signs of going right down to the wire.

“With the pullback in Trump-victory bets (over the last week), gold has lost some of its bullish momentum, dropping from last week’s record $2,790 to around $2,740,” said Dilin Wu, Research Strategist at Pepperstone. “A Republican sweep (of the Senate and Congress along with the Presidency), however, could reignite this rally.

In the final stretch before the voting, 'uncertainty around the US election outcome was surging, fueling a clear risk-off sentiment that kept both Asian equities and FX markets in a choppy range."

Bitcoin's on a tear

Crytpo assets are also trending higher, with Bitcoin at $71,057 from a 2.32% gain (as of 5:50am UAE time), while Dogecoin has shot up more than 9% to $0.1826.

It was March 2024 that Bitcoin hit its highest point to date of over $73,000.

"Despite the inherent volatility of financial markets, history suggests that Bitcoin's price tends to experience significant appreciation after each US election, regardless of the elected President," said Antonio Di Giacomo, Senior Market Analyst at XS.com. "This pattern has been observed over the years, with notable price surges in the cycles following elections."

1. In 2016, Bitcoin's price was around $715 in the first week of November, coinciding with that year's Presidential election, which resulted in a Trump win. The cryptocurrency's value saw a remarkable increase, peaking in December 2017 when it surpassed $18,000, representing a growth of over 3,000%.
2. In 2020, the November Presidential elections coincided with the onset of the COVID-19 pandemic. "However, Bitcoin significantly recovered, registering an increase of more than 450% in the 12 months following the election," said Di Giacomo. "By end 2021, the cryptocurrency reached an all-time high of nearly $69,000, solidifying its status as one of the top investment alternatives in times of economic uncertainty."

More to follow...