Skip navigation Scroll to top
Scroll to top

LGT Navigator: The countdown to the US elections is running and tensions are rising

November 2, 2020

After some quarterly reports of well-known tech giants such as Apple failed to convince investors, positive economic data from China today ensured a positive start to the week. However, capital markets are confronted with the same uncertainty factors. The US elections are now imminent and tensions are rising, not only with regard to the outcome of the election, but also whether a valid result will be available on Wednesday morning as hoped, or whether investors will be confronted with a protracted legal battle for victory. This, along with the uncertain development of the corona pandemic, will cause great nervousness and heightened volatility.

The countdown to the US elections is running and tensions are rising

US President Donald Trump is still lagging behind in the current polls of various institutes. In a few decisive swing states, however, the lead is marginal, so it seems uncertain whether the race will actually be decided in the night to Wednesday. After five appearances on Sunday, Trump wants to fight for votes today in three particularly contested states. His Democratic challenger Joe Biden, on the other hand, seems to be concentrating on the possibly decisive state of Pennsylvania. Trump, meanwhile, called for a decision on election night (probably with a view to possible uncounted mail votes).

On Wall Street, the Dow Jones Industrial fell by around -2% at times on Friday, but then managed to stem the losses until the close of trading, closing -0.59% lower at 26 501.60 points. Over the week, this resulted in a minus of -6.5% - the strongest weekly loss since March. The S&P 500 ended last week with a daily loss of -1.21% at 3 269.96 points. Due to quarterly reports and the outlook for some major tech stocks, which investors perceived as disappointing, the Nasdaq 100 fell by -2.62% to 11 052.95 points on Friday, thus losing -5.5% on a weekly basis. The losses were even greater last week in Europe. Against the backdrop of the lockdown imposed in many European countries due to the rapidly increasing corona case numbers, the benchmark index EuroStoxx 50 lost almost -8% on a weekly basis.

On the Asian stock exchanges, solid economic data from China provided support. The Purchasing Managers' Index for the Chinese industrial sector rose for the sixth consecutive month and, at 53.6 points in October, was well above the growth threshold of 50 points.

Meanwhile, oil prices fell to their lowest level in five months in view of the economic burdens caused by the new corona containment measures in Europe.

Americans slightly more optimistic shortly before the election date

Shortly before the elections on Tuesday, which are decisive for the future of the world's largest economy, the mood of the Americans brightened up again somewhat in October. The consumer confidence barometer climbs in the final version from 80.4 points in the previous month to 81.8 points ­ the best level since March. The University of Michigan commented that the effects of the corona crisis and extreme politicization will continue for a long time after the elections, with the potential to permanently change the economic and political landscape. The index for expectations improved from 75.6 (first evaluation 78.8) to 79.2 and the index for the assessment of the current situation fell from 87.6 (84.9) to 85.9 points. Meanwhile, consumer spending was stronger than expected, rising for the fifth consecutive month in September in the US. Compared with the previous month, spending rose by +1.4% (consensus +1.0%).

Euro economy makes brilliant, but probably short-lived, comeback in the third quarter

In the eurozone, the economy recovered from the corona shock in the third quarter, posting record quarter-on-quarter growth of +12.7%. Analysts had expected a much smaller recovery of +9.6%. In the second quarter, gross domestic product had slumped by -11.8% due to the corona crisis. The four largest economies in the euro zone recorded historic growth rates and exceeded market expectations. Germany: +8.2% (consensus +7.3%, Q2 -9.7%), France: +18.2% (consensus +15.0%, Q2 -13.7%), Italy: +16.1% (consensus +11.1%, Q2 -13.0%), Spain: +16.7% (consensus +13.5%, Q2 -17.8%). The question now is how much the new measures to contain the pandemic will weigh on the economies in the final quarter.

Inflation in the euro zone remains negative

Consumer prices in the euro area remained in negative territory in October as well. As in the previous month, prices fell by -0.3% compared with the equivalent period in the previous year. In the core rate, i.e. excluding energy and food prices, which are often susceptible to fluctuations, the inflation rate remained just positive at +0.2%. The European Central Bank (ECB) thus missed its inflation target by a wide margin, but according to ECB boss Christine Lagarde it is confident that inflation will turn positive again in 2021.



Economic Indicators November 2

MEZ Country Indicator Last
09:15 SP IHS Markit PMI Manufacturing (October final) 50.8
09:30 SZ IHS Markit PMI Manufacturing (October final) 53.1
09:45 IT IHS Markit PMI Manufacturing (October final) 53.2
09:50 FR IHS Markit PMI Manufacturing (October final) 51.0
09:55 GE IHS Markit PMI Manufacturing (October final) 58.0
10:00 EZ IHS Markit PMI Manufacturing (October final) 54.4
15:45 US IHS Markit PMI Manufacturing (October final) 53.3
16:00 US ISM PMI Manufacturing (October) 55.4

Earnings Calendar November 3

Country Corporate Period
SZ Adecco Q3
SZ Dufry Q3
GE Bayer Q3
GE Hugo Boss Q3
FR BNP Paribas Q3


LGT helps you make informed investment decisions

All about global economic and market trends at a glance

Subscribe to LGT's research newsletters

You can also follow us on Facebook or LinkedIn – or visit MAG/NET and discover interesting background articles. If you have questions, a consultant from the bank will be happy to help you.

Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi, +41 44 250 78 59, E-Mail:
Source: LGT Bank (Switzerland) Ltd.

Risk Disclosure (Disclaimer)
This publication is an advertising material / marketing communication. This publication is for your information only and is not intended as an offer, solicitation of an offer, or public advertisement to buy or sell any investment or other specific product. Its content has been prepared by our staff and is based on sources of information we consider to be reliable. However, we cannot provide any confirmation or guarantee as to its being correct, complete and up to date. The circumstances and principles to which the information contained in this publication relates may change at any time. Information that has been published should therefore not be understood as implying that no change has taken place since its publication or that it is still up to date. The information in this publication does not constitute an aid for decision-making in relation to financial, legal, tax-related or other consulting matters, nor should any investment decisions or other decisions be made on the basis of this information alone. It is recommended that advice be obtained from a qualified expert. Investors should be aware that the value of investments can fall as well as rise. Positive performance in the past is therefore no guarantee of positive performance in the future. Investments in foreign currencies are also subject to fluctuations in exchange rates. We disclaim all liability for any loss or damage of any kind, whether direct, indirect or consequential, which may be incurred through the use of this publication. This publication is not intended for persons subject to legislation that prohibits its distribution or makes its distribution contingent upon an approval. Any person coming into possession of this publication shall therefore be obliged to find out about any restrictions that may apply and to comply with them. In line with internal guidelines, persons responsible for compiling this report are free to buy hold and sell the securities referred to in this report.

US employment growth remains dynamic at the beginning of the year