Dollar is up, global stocks are mixed ahead of elections, and inflation data

The dollar bounced back some losses, and global stock markets traded differently as investors waited for the US midterms and inflation data.

U.S. stock futures fell, European contracts edged up slightly, and the Asian stock index rose on gains in Japan.

Chinese stocks tumbled, stalling a recent rally as traders factored in a spike in illnesses and official comments on the Covid-Zero policy. The biggest falls were in technology companies listed in Hong Kong.

Markets ahead of Tuesday’s election sparked a potential stalemate in government, which has historically been good for US equities. Also, many traders are waiting for the release of consumer prices on Thursday due to its impact on the Federal Reserve’s interest rate hike.

The US dollar rose slightly compared to all of its G-10 currency counterparts.

The inflation measure comes after the core consumer price index rose more than expected to a 40-year high in September. Even if prices start to decline, the CPI will be well above the Fed’s comfort zone.

At this time, opinions about the overall outlook for markets and the economy were divided.

Lead Economist at Goldman Sachs Group Inc. said the US economy still has a path to avoid recession.

Marko Kolanovic of JPMorgan Chase & Co. reported risk to equities from the Fed’s continued aggressive stance, and Morgan Stanley’s Mike Wilson said companies will need to cut spending heavily, including through layoffs before he becomes more bullish on US equities.

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Treasury bond yields rose, while yields on benchmark Australian and New Zealand government bonds edged up more than 10 basis points.

The yield on Japan’s benchmark 10-year bond stalled at the upper end of the 0.25% target range for the central bank as a trading ground to a halt.

The Bank of Japan is buying up so many 10-year bonds that there may soon be none left. According to some data, at the end of October, the bank owned 73% of 10-year government bonds with a residual maturity of at least seven years.

At the same time, the swap markets are leaning toward a 50 basis point Fed rate hike in December after the fourth big hike to the target range of 3.75% to 4% at last week’s meeting. Rates are expected to peak just above 5% around mid-2023.

Stocks

S&P 500 futures were down 0.1% as of 6:56 am London time. S&P 500 was up 1% on Monday.

Nasdaq 100 futures fell 0.1%. The Nasdaq 100 fell 1.1%.

Euro Stoxx 50 futures are up 0.1%

Japanese Topix index is up 1.2%

S&P ASX is up 0.4%

The Hang Seng index fell 0.4%.

The Shanghai Composite index fell 0.5%.

Currencies

The Bloomberg Spot Dollar Index rose 0.1%.

The euro fell 0.2% to $0.9996.

The Japanese yen remained virtually unchanged at 146.73 per dollar.