(Bloomberg) — European stocks fell as traders’ focus turns to Tuesday’s too-close-to-call US election and a Federal Reserve interest-rate decision looming later in the week.
The Stoxx Europe 600 Index was down 0.3% as of 14:32 p.m. in London, with autos and healthcare shares leading declines. Ferrari NV shares fell after reporting a drop in shipments amid a slump in China, while Vestas Wind Systems A/S dropped after saying it expects full-year earnings at the lower end of its guided range. Schroders Plc was another big faller after the asset manager warned of further outflows.
Surveys show the race for the presidency between Donald Trump and Kamala Harris close to deadlocked both nationally and across swing states. Some investors could rotate back into European stocks and out of US peers if Harris wins, pressuring US equities, according to RBC Capital Markets.
“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. Traders are 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.
The days following the US vote 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 interest rates, with traders set to closely follow Chair Jerome Powell’s press conference. 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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