On the day of the presidential election, early trading started off as a flat day on the back of disappointing economic data from Europe. On a monthly basis, German factory orders fell 3.3%, the biggest drop in the past year. Last month's orders fell a revised -0.8% and economist estimates saw a decline of -0.4%.
Overnight, the Reserve Bank of Australia chose to keep its benchmark interest rate unchanged at 3.25%. Economists were widely expecting a cut of 25 basis points to 3%. The Aussie dollar rose to 1.0437 vs. the US dollar from 1.0370 shortly before the announcement. The central bank's reasoning behind declining to cut the interest rate was the noted pickup in housing market activity and the benefits of eased conditions. It also noted that recent Chinese data had suggested that its economic growth had stabilized and potentially bottomed.
Intraday, stocks jumped and broke through technical levels near S&P 1423. Commodities were close behind, with crude oil and precious metals spiking shortly thereafter. Crude oil futures reached an intraday level as high as 4.15% before closing up about 3.1%. Gold futures finished the day 2% higher. Some investors suggested that the cause of this jump was the expectation of an Obama win, but it is more likely that a series of technical levels were broke, causing stops on short positions to be triggered.
In the morning, Fossil
(NASDAQ:FOSL) beat on the past quarter's earnings, but missed revenues by a very wide margin. Future guidance was also slightly lower, but the stock plunged, closing 10.5% lower on the day. Post-market, News Corp
(NYSE:NWSA) beat earnings and saw large gains in its cable divisions.
Tomorrow's Financial Outlook
Tonight's result of the presidential election will undoubtedly have an effect on market action tomorrow. The generally accepted principle is that an Obama win is stock market negative and that a Romney win is stock market positive. However, this kind of reaction cannot be painted with such a wide brush, and is more specific to individual sectors such as financials (regulation) and health care.
In the afternoon, the US Treasury will auction $24 billion in 10-year notes. This amount is slightly larger than the normal $21 billion. In economic data, the Federal Reserve will release last month's consumer credit data. Economists estimate that total consumer credit will rise by a seasonally adjusted $10.175 billion.
In earnings, Time Warner
(TWX), Starwood Properties
(HOT), Kraft Foods
(QCOM), Activision Blizzard
(ATVI), Whole Foods
(WFM), Continental Resources
(PRU), MAKO Surgical
(MAKO), Monster Beverage
(CBS), and Macy's
(M) will report.
No positions in stocks mentioned.
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