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GLOBAL MARKETS-Factory data lifts stocks, dollar gains on U.S. election jitters

Published 2020-11-02, 04:36 p/m
© Reuters.
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(Adds close of U.S. markets)

* Graphic: 2020 asset performance http://tmsnrt.rs/2yaDPgn

* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh

* Equities rise on strong U.S., China, euro zone factory data

* Dollar, gold gain on uncertainty over U.S. election

* Crude rebounds after early virus demand concerns

By Herbert Lash

NEW YORK, Nov 2 (Reuters) - Global equity markets rebounded on Monday as robust U.S., China and euro zone factory data offset lockdowns in Europe to combat record COVID-19 cases, while the dollar and gold rose on U.S. presidential election jitters.

U.S. manufacturing activity accelerated more than expected in October, with new orders jumping to their highest in nearly 17 years, while Chinese factory activity expanded the fastest in a decade and euro zone manufacturing also sped up. Purchasing Managers' Index surveys eased growing concerns about global growth in the face of a resurgent pandemic that had pushed MSCI's world equity index down almost 8% over the prior three weeks.

Still, the dollar hit one-month highs against a basket of peers as risk sentiment soured on uncertainty about the U.S. election and as expected volatility in major currencies rose to its highest level since April.

U.S. Treasury yields mostly drifted lower as investors braced for an eventful week with central bank meetings by the Federal Reserve, Reserve Bank of Australia and Bank of England, as well as the release of U.S. jobs data for October.

"While Election Day looms, investors seem to be focused on potential central bank moves" as the RBA on Tuesday and BofE on Thursday will likely enhance monetary easing programs, said Yousef Abbasi, global market strategist at StoneX Group Inc in New York.

Driving equity markets were moves into value stocks in the beaten-down financial and energy sectors, while tech-led growth stocks lagged, which Abbasi said was part of a global trend.

MSCI's global benchmark .MIWD00000PUS of equity performance in 49 countries advanced 1.24% to 557.84 and its index for emerging markets stocks .MSCIEF rose 1.02%.

Europe's broad FTSEurofirst 300 index .FTEU3 closed up 1.59% at 1,346.48, while on Wall Street the Dow Jones Industrial Average .DJI rose 1.6%, the S&P 500 .SPX gained 1.23% and the Nasdaq Composite .IXIC added 0.42%.

No immediate winner in the presidential race could shake markets. Republican President Donald Trump trails Democratic challenger Joe Biden in national opinion polls, but polls in the swing states that will decide the election show a closer race. will likely sell off in a clear Democratic victory, while the dollar will rally if Republicans win, said Solita Marcelli, Americas chief investment officer at UBS Global Wealth Management, in a note.

"Sometimes these markets will give clearer signals than equity markets," she said.

The VIX volatility index .VIX , which rose to its highest in four months last week, eased more than 2% to 37.13.

Crude prices rebounded to settle more than 2% higher after earlier trading sharply lower as renewed coronavirus lockdowns in Europe and parts of the United States have dimmed the outlook for fuel consumption, keeping crude prices well under $40 a barrel.

Brent crude futures LCOc1 rose $1.03 to settle at $38.97 a barrel. U.S. crude futures CLc1 settled up $1.02 at $36.81 a barrel.

Brent earlier had slumped to $35.74 a barrel, a level unseen since late May. U.S. crude slid as low as $33.64. O/R

More than 46 million people have been infected globally and over 1.2 million have died from COVID-19, according to a Reuters tally. The United States leads the world with more than 9 million cases and 230,000 deaths. currencies, the British pound GBP= fell 0.17% to $1.2919 after hitting its lowest in almost four weeks on news of a new national lockdown. The euro EUR= was last down 0.08%, at $1.1638.

The Japanese yen JPY= weakened 0.08% versus the greenback to 104.75 per dollar.

Spot gold prices XAU= rose 0.92% to $1,895.21 an ounce. U.S. gold futures GCv1 settled up 0.7% at $1,892.50.

Yields on the 10-year U.S. Treasury US10YT=RR note fell 1.6 basis points to 0.8434%.

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