Overnight Market Wrap: 9 November 2022

Overnight Market Wrap: 9 November 2022

Key Points:

  • US Stock Futures Fluctuate as Votes Trickle In
  • Investors eye prospects of gridlock in US government
  • Bitcoin hammered as turmoil returns to crypto tokens

US equity contracts swung between gains and losses and Asian stocks were mixed as investors awaited midterm election results, with potential for government gridlock seen as positive for shares. 

Benchmark indexes declined in Japan while rising in Australia and South Korea. The dollar and Treasuries were little changed during morning trading in Asia. Bond yields fell in Australia and New Zealand, tracking moves in the US overnight.

Crypto tokens were under pressure after a selloff that wiped out about 10% from the price of Bitcoin on Tuesday. Sentiment was dented after the largest crypto exchange swooped in to buy a smaller rival that ran into liquidity trouble. 

“The stock market historically has performed well after midterm elections and during third years of presidential cycles,” according to a note from Yardeni Research. “But none of these positive political cyclical trends will make much difference if inflation remains elevated, which would force the Fed to cause a hard landing of the economy.”

Thursday’s consumer-price-index data may be the next event risk for the Fed’s policy rate and comes on the heels of core consumer prices rising more than forecast to a 40-year high in September. Even if prices begin to moderate, the CPI is far above the central bank’s comfort zone.

The turmoil in crypto markets came out of an unexpected development, with billionaire Changpeng “CZ” Zhao consolidating his position atop the crypto world on Tuesday with a move to take over FTX.com. Terms of the emergency buyout were scant, helping to send prices of cryptocurrencies tumbling after a brief rebound.

Oil steadied after a two-day decline as traders weighed the support from a weaker dollar and gold was little changed after jumping the most in a month.

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