The American Stock Market: A Comprehensive Overview
As the US election day draws near, the American stock markets have been trading mixed, with the technology sector leading the way. The race between the Democratic candidate Kamala Harris and the Republican candidate and former president Donald Trump is neck and neck, according to Ipsos statistics. Recent macroeconomic data shows a larger-than-expected decrease in job vacancies, while consumer confidence among American households rose last month. Investors are eagerly awaiting data on employment and gross domestic product (GDP) due later today, with all eyes on the final stretch of the presidential election. The broad S&P 500 index rose by 0.2%, while the tech-heavy Nasdaq surged by 0.8%. However, the industrial index Dow Jones declined by 0.4%.
Commodities were also trading mixed yesterday, with oil prices continuing to decline following a 6% drop on Monday due to Israel’s retaliatory attack against Iran last Saturday. Despite the attack not targeting oil or nuclear facilities, it did not impact the threatened oil exports from the region. Iran has vowed to respond with all available means. In China, low demand continues to weigh on oil prices, despite another stimulus package from the country’s central bank aimed at supporting the financial system. Later today, the Energy Information Administration will release preliminary data on US crude oil inventories, with some estimates suggesting an increase last week, although the American Petroleum Institute reported a decline in weekly oil stocks yesterday. WTI crude oil fell by $0.2 to $67.2 per barrel, while Brent crude dropped by $0.3 to $71.1 per barrel.
Base metals saw negative movements, with tin leading the losses at 1.1% followed by lead at 0.9%. Zinc and nickel declined by 0.8% and 0.7%, respectively, while copper fell by 0.1%. Aluminum was the only gainer, rising by 0.3%. Gold reached a new record high yesterday as uncertainty surrounding the US presidential election, Middle East tensions, and expectations of further interest rate cuts created favorable conditions for the precious metal to thrive. Gold surged by $30.0 to $2,771.9 per ounce.
Among listed American companies, Ford Motor plummeted by 8.5% after lowering its full-year forecast. Tech giants like Nvidia and AMD saw gains of 0.5% and 4.0%, respectively, while Meta, the parent company of Facebook, rose by 2.6% and Microsoft climbed by 1.3%. Boeing also saw an increase of 1.5%. On the other hand, PayPal dropped by 4.0%, Pfizer by 1.4%, and Spirit Airlines by 9.4%. Alphabet, the first of the “fabulous seven” tech companies, reported a 5.9% increase in after-hours trading.
The yield on the US ten-year Treasury bond decreased by 3 basis points to 4.26%.
Over in Asia, markets opened with mixed results, with the Japanese stock exchange rising in response to Nasdaq’s gains, while Chinese markets started lower. Beijing has expressed dissatisfaction with the EU’s proposed tariffs on electric vehicles, prompting threats of retaliatory measures from China. The failure of the latest stimulus package to impress investors has also weighed on market sentiment. At 7:30 am, the Hang Seng index in Hong Kong was down by 1.7%, while the Shanghai Composite Index fell by 1.0% and the Japanese Nikkei 225 index rose by 1.0%.
In Sweden, SKF, a ball bearing manufacturer, reported higher-than-expected operating income of 2,821 million SEK and net sales of 23,692 million SEK, slightly lower than the anticipated 24,216 million SEK. Later in the morning, Scandic Hotels will announce its third-quarter results.
Analysts have issued recommendations for various companies, with Storytel receiving target price upgrades from Pareto to 110 SEK and DNB to 80 SEK, both reiterating a buy rating. Morgan Stanley downgraded SSAB to 54 SEK and upgraded Tele2 to 120 SEK, maintaining a neutral rating for both. Barclays raised its target price for Ericsson to 70 SEK while keeping an underweight recommendation, and SEB lowered its target price for Linc to 86 SEK, maintaining a hold rating.
On the macroeconomic front, Wednesday is expected to be eventful with the release of Australia’s annual and quarterly consumer price index figures, France’s annual and quarterly GDP data, and Spain and Germany’s annual and quarterly CPI and GDP numbers. The eurozone will also report similar data at 11:00 am. In the US, the Bureau of Economic Analysis will release the same statistics at 1:30 pm, along with the October employment change at 1:15 pm, expected home sales in September at 3:00 pm, and crude oil inventories at 3:30 pm.
In recent years, the rise of artificial intelligence (AI) has been a topic of much debate and speculation. From self-driving cars to facial recognition technology, AI is revolutionizing industries and changing the way we live and work. But what happens when AI is used to manipulate financial markets?
One of the most controversial uses of AI in finance is high-frequency trading (HFT). HFT involves using powerful computers to execute trades at lightning-fast speeds, often in milliseconds. This allows traders to take advantage of tiny price differences in the market and make a profit. While HFT can provide liquidity to the market and reduce trading costs, critics argue that it can also create instability and lead to market manipulation.
In 2010, the “flash crash” highlighted the dangers of HFT. During the flash crash, the Dow Jones Industrial Average plummeted nearly 1,000 points in a matter of minutes, only to recover just as quickly. Many blamed HFT for exacerbating the crash, as algorithms executed trades faster than human traders could react.
Since the flash crash, regulators have taken steps to curb the influence of HFT in the market. In 2015, the U.S. Securities and Exchange Commission (SEC) implemented new rules aimed at increasing transparency and reducing the risk of market manipulation. These rules require HFT firms to register with the SEC and provide detailed information about their trading strategies.
Despite these regulations, concerns about the impact of AI on financial markets persist. Some worry that AI could be used to create sophisticated trading algorithms that exploit loopholes in the market and manipulate prices for personal gain. Others fear that AI could lead to a “black box” scenario, where trades are executed without human oversight, making it difficult to detect and prevent market manipulation.
In response to these concerns, some firms are investing in AI-powered surveillance tools to monitor trading activity and detect potential market manipulation. These tools use machine learning algorithms to analyze vast amounts of trading data in real-time, flagging suspicious patterns and alerting regulators to potential violations.
While AI has the potential to revolutionize finance and improve market efficiency, it also poses risks that must be carefully managed. Regulators, market participants, and AI developers must work together to ensure that AI is used responsibly and ethically in the financial industry. Only then can we harness the full potential of AI while safeguarding the integrity of our markets.