The ASX 200 is up 38 in mid morning trade, in what should be a quiet day. Gold the weakest. Staples, banks Energy and Materials all up. CTD in another trading halt. RBA today. Market implications for the mid-terms ahead tonight.#ausbiz


  • RBA Interest Rate Decision
  • Ex-dividend – Bisalloy Steel Group (BIS) 4.0c
  • Japanese data – Nikkei Services, Household Spending


  • European data – Markit Composite PMI Final, Markit Services PMI Final, PPI
  • US economic data – JOLTS – Job Openings
  • US Mid-term Elections


  • Corporate Travel (CTD) – Trading halt to review and respond to a further report issued by VGI Partners. Initial view of management is that the new report raises no substantive new issues but they need additional time to fully review and respond comprehensively.
  • Fortescue Metals (FMG) – Mysteel.com says lower grade iron ore (58% content) is up 12% on year ago levels, while higher quality ore (62% content) hasn’t changed much in price. Not sure this improvement is reflected in the FMG share price (daily chart over the last year).



All 435 seats in the US House of Representatives are up for grabs. Thirty-five seats in the 100-member Senate (Governors) are on the ballot this year as well. The outcome could influence future policy direction.

Historically, markets have performed well after a mid-term election. In the 22 mid-term elections since 1930, only 2 have produced negative stock market performance in the following 12 months. 1930 and 1938, while the average gain was 12.9%.

Focus for markets will be

  • Fiscal policy/tax cuts – impact on growth and inflation
  • Trade policy
  • Presidential oversight (Mueller probe) which could have implications for policy agreemnt on factors above


  1. Democrats gain a majority in the House, Republicans retain a majority in the Senate. (base case) – The gridlock scenario prevents the White House doing anything too radical, although Trump could use his executive orders.. Possible infrastructure deal, avoids fiscal cliff, greater oversight of president, negative for emerging markets. Traditionally markets have performed well during market gridlocks. Ovrall likely to be Neutral to positive (priced in)
  2. Republican majority in both chambers. The status quo. This should see stocks rally on expectations of further tax cuts and pro-business MAGA policies, including protectionist policies. Tax reform to continue, infrastructure deal unlikely, select changes to social welfare. The net result is an increased upside risk to growth/inflation and pressure on the deficit. This will likely to be positive initially for markets and USD should rally but bonds should sell-off (higher rates to combat inflation) which could be negative for markets overall.
  3. Democrats winning both the House and Senate. The “blue wave” and depend son voter turnout. This would be negative for stocks if some of the more stimulatory policies are reversed/repealed. Repeal of current tax deal but infrastructure deal likely so impact on growth could be minimal. Bonds would rally, US dollar should sell-off and while equities would sell off initially, lower bond yields would be a positive. This scenario has broader positive implications for commodity prices, both due to USD weakness and also impact of infrastructure spending. Negative for equity markets. Would also mean more pressure for Trump in terms of the Mueller investigation/Russian probe

Polling starts midnight tonight (for us) and the first polls will start to close about 11am tomorrow. We should start to get an idea of the results by tomorrow night.




US EQUITIES – S&P500 +19 (+0.15%), Dow Jones +94 (+0.37%), Nasdaq -74 (-0.85%).

Main themes

  • US tech stocks underperform. Apple -3.12% was downgraded by Rosenblatt Securities on lower iPhone sales. Amazon (-2.03%) fell on Trump comments about antitrust violations.
  • Caution ahead of mid-term elections.

EUROPEAN MARKETS – Mixed. STOXX500 -0.16%, UK FTSE +0.14%, German DAX -0.21%, French CAC -0.01%.


  • The USD is lower at 96.44.
  • The Aussie dollar is a bit stronger at US72.00c.

BONDS – 2-yr: -1 bp to 2.90%, 5-yr: -2 bps to 3.02%, 10-yr: -2 bps to 3.19%, 30-yr: -3 bps to 3.43%


  • WTI crude futures closed down US4c at US$63.10 as US sanctions against Iran take effect. The US has said eight countries (China, Greece, Italy, Taiwan, Turkey, South Korea, Japan and India) will be able to continue buying Iranian oil. 20 countries have already cut oil imports from Iran, reducing purchases by more than 1mbpd.
  • Iron Ore – IRESS reports iron ore was down US$1 at US$74.50 a tonne. The CommSec site says China Import (Fines 62% Fe) was up US$1.70 at US$75.80/dry ton. (CFR Tianjin port)
  • LME metals – Mixed. Cu -1.46%, Ni -1.51%, Al +0.10%.


  • US economic data – ISM Services 60.3 (consensus 58.8; prior 61.6)
  • China – President Xi Jinping reiterated his rhetoric against protectionism and commitment to free trade. Xi said China was pursuing “a new round of high-standard opening up” to broaden market access to the rest of the world.

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