Investing.com - Here are the top five things you need to know in financial markets on Wednesday, November 2:
1. Fed rate decision on tap, though no move expected
The Federal Reserve (Fed) is not expected to take action on interest rates at the conclusion of its two-day policy meeting at 2:00PM ET (18:00GMT) on Wednesday.
The central bank will also release its latest statement as investors look for any change in language which could point more clearly to a December rate hike.
A move ahead of the November 8 presidential election is seen as highly unlikely.
Markets are currently pricing in a 6.2% chance of a rate hike, according to Investing.com's Fed Rate Monitor Tool. For December, odds stood at 73.3%.
2. Investors flee to safe haven assets on election uncertainty
With less than a week to go for the U.S. presidential elections, some recent polls have suggested Republican nominee Donald Trump has moved ahead of Democrat rival Hillary Clinton, forcing markets to rethink positions.
“Market opinion is coming to the conclusion that a Trump win would create too much uncertainty and is bad for risk sentiment generally,” experts from Societe Generale (PA:SOGN) explained.
A Reuters equity market poll last month showed a majority of forecasters predicted that U.S. stocks would perform better under a Clinton presidency than a Trump administration.
In that regard, investors preferred to place money into safe haven assets such as the yen, gold or government bonds.
USD/JPY hit a two-week low, gold hit a fresh one-month high while prices rose on 10-Y government debt sending yields on UK 10-Year, Germany 10-Year and U.S. 10-Year lower.
3. ADP to be last reference on labor market for Fed
ADP will release its October employment report at 8:15AM ET (12:15GMT) on Wednesday with economists looking for the creation of 165,000 nonfarm payrolls.
While not a reliable indicator for predicting the official numbers out in the government report released on Friday, investors do eye the data as a gauge for the health of the labor market.
Furthermore, it will be the final job measure for the Fed to digest before making their decision on monetary policy later in the day.
4. Oil tumbles more than 1% to a 5-week low
Oil prices slumped to a five-week low on Wednesday, as market players awaited fresh weekly information on U.S. stockpiles of crude and refined products, while doubts over an output cut by major global oil producers dampened sentiment.
After markets closed Tuesday, the American Petroleum Institute said that U.S. oil inventories increased by 9.3 million barrels in the week ended October 28, well above market expectations.
With that in the background, investors will look ahead to the U.S. Energy Information Administration’s release of its weekly report on oil supplies at 10:30AM ET (14:30GMT) Wednesday, amid analyst expectations for an increase of 1.013 million barrels.
U.S. crude oil futures fell 1.44% to $46.00 at 6:01AM ET (10:01GMT), while Brent oil traded down 1.29% to $47.52.
5. Global stocks lower on U.S. election and Fed jitters
The political uncertainty over the U.S. elections as some polls began to show Republican nominee Donald Trump has moved ahead of Democrat rival Hillary Clinton drove some market players out of equities and market participants were cautious ahead of the Fed’s announcement on monetary policy.
Asia closed with sharp losses with the Nikkei suffering from the surge into the safe haven yen.
European stocks opened lower on Wednesday, as uncertainty over the outcome of the upcoming U.S. presidential election continued to weigh on market sentiment.
Meanwhile, U.S. futures pointed to a slightly lower open. At 6:07AM ET (10:07GMT), the blue-chip Dow futures lost 0.20%, S&P 500 futures traded down 0.14% and the Nasdaq 100 futures gave up 0.14%.