Dollar Dips as Poll Shows Harris Leading Trump in Iowa

The US dollar declined after a surprising Iowa poll showed Kamala Harris leading Donald Trump, impacting expectations around the election's economic implications. Investors adjusted, with the dollar down against the yen and euro, and the trade-sensitive Australian dollar rebounding. Meanwhile, oil prices rose as OPEC+ announced a delay in increasing output, reflecting concerns over global demand.

Equities

The FTSE 100 rose 0.8% on Friday, recovering from a recent three-month low as shares of Reckitt Benckiser surged 7.4% following clearance from liability in a preterm formula case.

The midcap FTSE 250 gained 0.5% but remained close to recent lows, as Britain’s finance minister Rachel Reeves’ budget announcement stirred concerns about rising inflation, potentially impacting rate-cut expectations from the Bank of England. Despite these worries, investors still anticipate a 25 basis point rate cut at the upcoming BoE meeting, although predictions for further cuts in December and next year have tempered.

In the UK, Tesco’s stock climbed 1.7% after announcing plans to return £700 million to shareholders through an additional share buyback, reflecting the company’s robust financial position. Meanwhile, online fashion retailer Boohoo saw its shares increase by 3.3% as it appointed Dan Finley as its new CEO, a move seen as a setback for top investor Frasers, who had aimed to place its controlling shareholder Mike Ashley in the role.

Across the Atlantic, Wall Street’s main indexes closed higher, with the Dow Jones gaining 0.69%, the S&P 500 up 0.41%, and the Nasdaq rising 0.8%, buoyed by strong earnings from Amazon.

Amazon’s stock jumped 6.2% after reporting robust retail sales that exceeded Wall Street estimates, highlighting the company’s strength in consumer discretionary spending and lifting the sector’s index by 2.4% to a two-year high. Intel saw one of the largest percentage gains in the session, with shares soaring 7.8% on a better-than-expected revenue forecast, while Chevron’s shares rose 2.8% after surpassing profit estimates, supported by higher oil output.

Apple’s stock declined by 1.2% as investors reacted to a dip in China sales during its most recent quarter as well as news that Warren Buffett has sold more of his stake in the company.

Earlier in the week, earnings from other tech giants Meta and Microsoft included warnings about rising AI infrastructure costs, weighing on the Nasdaq and pulling it down before Friday’s rebound.

Forex & Commodities

The US dollar fell in Asia as investors weighed election prospects, with Democratic candidate Kamala Harris showing a surprising lead in Iowa, sparking a 0.5% drop in the dollar index.

Despite weak US jobs data in October showing just a 12,000 increase in nonfarm payrolls, investors held steady on predictions that the Federal Reserve would proceed with a 25 basis point rate cut in November.

The euro gained 0.6% to $1.0901, with potential resistance at $1.0905, while the yen strengthened by 0.9% to 151.60, reflecting early selling in the dollar. The British pound recouped some losses, reaching $1.2994 after last week’s dip to $1.2841, spurred by expectations of a Bank of England rate cut amid inflation concerns following the latest Labour government budget.

Gold held steady at $2,739.63 per ounce, up slightly by 0.2%, as markets awaited a possible US interest rate cut and election results that could affect safe-haven demand. US gold futures remained stable at $2,749.30.

Oil prices rose as OPEC+ delayed a planned December output hike by one month. Brent crude was up 1.9% to $74.49 per barrel, while West Texas Intermediate rose 2% to $70.90. The delay indicates OPEC+’s intent to support prices amid weak demand and ongoing production cuts, although analysts suggest price gains may be limited, with resistance at around $78.50.