Europe Summary and Highlights 4 Nov

Main focal point the big US election results, with a decisive Democrat clean sweep: Senate 54 (+7 seats) to 44, and House currently 228 to 139 with a running 25 seat gain as things stand..

Initial reaction in Asia was a follow through spike down in tech stocks, but the Nasdaq found support ahead of the summer lows and back into strong positive, now up almost 1%, with volatility down and risk sentiment up.

Positives to be found in a convincing result beyond chaotic dispute and obstruction (Trump quoted saying he would absolutely accept them and Democrats did a good job). And from a gridlock that the market actually traditionally rather likes (less the better). Also at the margin, some relief on US bond pressure that had become a more material driver, even given the flip side that fiscal policy is less directly additive going forward. There’s also the hope perhaps of some containment of measures and stances that have been so globally impactful, although many remain to a large extent within the executive remit with varying abilities to obstruct.

FX likewise sees net pre-election position squeezes with the dollar off around ½ %, with the higher beta / most short counters leading (NZD +1%).

EZ CPI up to 4% from 3.8%, in line with expectations. Final service PMI 51.7 from 51.9.

UK service PMI 52.8 from 53.1.