UK Food Inflation Forecast to Hit 6.4% by Mid-2027 
ECB Rate Hike in Focus as Oil Tops $100 
Japanese Yen Nears Seven-Month High as Oil Approaches $100 
Oil Prices Hold Near Highs as U.S.-Iran Conflict Escalates 
US Bans Canadian Alcohol, Motorcycles as Trade War Escalates 
Canada Retaliatory Tariffs on U.S. Goods Take Effect 
Hormuz Shipping Slows as Iran Threats Lift Oil Risks 
Oil Prices Climb as Iran Threatens Gulf Energy Infrastructure 
China Buys 1 Million Tons of U.S. Soybeans Ahead of Xi Visit 
Fitch Eyes Japan Budget for Fiscal Discipline 
Oil Prices Rally as Brent Nears $100 on U.S.-Iran Escalation 
U.S. Stock Futures Steady as Oil Tops $100 Ahead of Inflation Data 
Japan GDP Growth Beats Forecast, Boosting BOJ Rate Hike Bets 
Norway Core Inflation Rises to 3% in August 
US Stock Futures Mixed as Fed Rate Hike Bets Rise 
China Inflation Accelerates in August as CPI, PPI Rise 
Asian Stocks Fall as Oil Tops $100, Yields Rise 
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Market Impact of Trump's Rising Odds
The increasing betting odds of a Donald Trump victory have resulted in gains for US equities, yields, and the dollar. Conversely, Europe-focused and tariff-sensitive market segments have struggled to keep pace.
Despite these market movements, polls reveal a tightly contested race between Kamala Harris and Donald Trump. Analysts expect a divided Congress, with Republicans likely to retain the Senate and Democrats favored to reclaim the House. According to Barclays strategists, a divided government appears to be the most probable outcome, countering the "Redsweep" scenario the markets are currently pricing in.
Upcoming Election Risks
“Given the event risk and the close nature of the race, market jitters are expected leading up to the vote,” Barclays stated. Historically, global equity markets experience a rally post-election, driven primarily by sectors like Cyclicals and Value.
The impending vote may act as a catalyst for heightened risk-taking and capital rotation, especially into European equities as we approach 2025. However, any delay in announcing a winner could induce volatility in the markets.
Outcomes of the Election
Betting markets currently favor a Republican sweep, which may bolster US equities through potential tax cuts, while negatively impacting bonds due to inflation concerns. A split Congress under Harris might ease tariff risks and stabilize the market, a scenario Barclays views as favorable for European equities.
In contrast, if Trump wins but faces a divided Congress, stricter tariff and immigration policies could harm US equities and pose significant challenges for European markets.
Conclusion
In summary, the upcoming elections could significantly impact market dynamics. A Trump victory may bring volatility and opportunities, while a Harris win could stabilize tariffs and benefit European equities.
