Euro Nears 4-Month Low as ECB Rate Debate Intensifies

The euro continued to hover near its lowest level since early July, pressured by concerns over eurozone PMIs showing ongoing contraction and the European Central Bank debating further rate cuts. Meanwhile, US dollar strength was supported by bullish bets on US growth and uncertainties around the upcoming election. In corporate news, Boeing workers rejected a contract offer, extending their strike and deepening the company's financial struggles.

Equities

The FTSE 100 fell 0.6% on Wednesday, marking its fourth consecutive day of losses, as investors remained cautious ahead of the UK budget and US presidential election.

Mining stocks led the decline, with industrial metal miners dropping 1.6% and precious metal miners slipping 1.4% as copper and gold prices fell against the backdrop of a stronger US dollar. Investor sentiment was further weighed down by concerns over inflationary pressures if Donald Trump wins the US presidency.

Among individual stocks, Reckitt gained 3.9% after reporting a smaller-than-expected fall in third-quarter underlying sales, thanks to strong demand for its Nurofen painkillers and Strepsils lozenges. WPP jumped 6.1% after the British advertising group posted a better-than-expected rise in third-quarter organic revenue. Meanwhile, traders looked ahead to comments from Bank of England Governor Andrew Bailey later in the day, with the market fully pricing in a rate cut in November.

In the US, the S&P 500 fell 0.92%, weighed down by losses in tech stocks and concerns over rising Treasury yields. Benchmark 10-year US Treasury yields reached a three-month high, leading to declines in megacap stocks, including Nvidia, which dropped 2.81%, Apple, down 2.16%, and Meta Platforms, which fell 3.15%. The Nasdaq Composite lost 1.60%, while the Dow Jones Industrial Average dropped 0.96%.

McDonald's saw a 5.12% decline after an E. coli outbreak linked to its Quarter Pounder hamburgers resulted in one death and several illnesses. Coca-Cola shares also slipped 2.07%, as the company reiterated its profit growth forecast but warned of higher revenue pressures. On the other hand, Texas Instruments rose 4% after beating third-quarter profit forecasts, and AT&T gained 4.60% after reporting stronger-than-expected wireless subscriber growth.

Boeing shares dropped 1.76% after reporting a quarterly loss of $6 billion, driven by a strike from its factory workers, who were set to vote on a new contract offer later in the day. Tesla’s stock gained 8% in after-hours trading after exceeding profit margin estimates in its latest earnings report.

Forex & Commodities

The US dollar traded near a three-month high, buoyed by expectations for slower interest rate cuts by the Federal Reserve and growing speculation of a potential Trump victory in the upcoming election. The dollar index stood at 104.30, close to its overnight high of 104.57.

In contrast, the Japanese yen was at 152.17 per dollar after Japan’s finance minister warned against rapid currency moves, providing some respite to the struggling yen. Meanwhile, the euro remained weak, trading at $1.079, as traders ramped up expectations of larger rate cuts from the European Central Bank.

Gold prices rose 0.5%, supported by safe-haven demand amid geopolitical tensions and US election uncertainty, with spot gold reaching $2,729.71 per ounce, just shy of Wednesday's record high of $2,758.37. Oil prices also climbed more than 1%, with Brent crude at $75.91 and US West Texas Intermediate crude at $71.77, as renewed Middle East tensions stoked concerns about supply disruptions.