European Stocks Creep Higher as US Vote Keeps Traders on Edge

Macarena Muñoz
·3-min read

(Bloomberg) -- European stocks edged higher Tuesday as a too-close-to-call US presidential election kept traders wary of making big bets.

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The Stoxx Europe 600 Index ended the session up 0.1%, with declines among autos and healthcare shares curbing gains across industrials and media shares. Ferrari NV shares fell after the luxury carmaker reported a drop in shipments amid a slump in China, while Vestas Wind Systems A/S dropped after forecasting full-year earnings at the lower end of its guided range.

Others to lose ground Tuesday included asset manager Schroders Plc which warned of further outflows, and AstraZeneca Plc which skidded the most since 2017 on concerns over a Chinese probe into the UK drugmaker.

Investors’ eyes are firmly trained on the outcome of the US election, with surveys showing the race between Donald Trump and Kamala Harris is deadlocked both nationally and across swing states.

“There’s going to be a lot of repricing in coming days, so brace for volatility,” Ludovic Subran, chief economist at Allianz SE, said in an interview with Bloomberg TV.

The outcome of the US election could have significant implications for the global economy and financial markets. RBC Capital Markets expects some investors to rotate back into European stocks and out of US peers if Harris wins. Many traders are also bracing for the possibility of delayed or contested results, which would fan volatility.

“From my end there is nothing that I can see which could suggest the outcome leaning either way,” said Arnaud Girod, head of economics and cross-asset strategy at Kepler Cheuvreux in Paris.

There will also be news this week on the interest-rate front, as the days following the election will see central banks responsible for more than a third of the global economy decide on borrowing costs.

Thursday will be when the Fed announces its next decision on monetary policy, with Chair Jerome Powell’s press conference expected to signal the path for interest rates. Earlier that day, the Bank of England’s Monetary Policy Committee will also meet.

“The market is longing for the election to be over so that the focus can return to earnings and monetary policy,” said Susana Cruz, strategist at Panmure Liberum.

For more on equity markets:

  • Markets Aren’t Going Gently Into Election Night: Taking Stock

  • M&A Watch Europe: Vodafone, Carrefour, Salzgitter, EQT, Atos

  • Gulf IPOs See Soaring Demand as Economies Diversify: ECM Watch

  • US Stock Futures Rise; QuinStreet, Astera Labs, Palantir Gain

  • Delays at the Gate: The London Rush

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--With assistance from Jan-Patrick Barnert, Kit Rees and Julien Ponthus.

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