Stocks Fell as the U.S. Accused Rivals of Election Interference

U.S. stocks declined on Wednesday. On the other hand, bond yields TMUBMUSD10Y, 0.813% increased due to renewed talks about a fiscal stimulus package. According to a spokesman for House Speaker Nancy Pelosi, discussions between her and U.S. Treasury Secretary Steven Mnuchin have reached a stage where they are “closer to put pen to paper to write legislation.” They plan to continue talks on Thursday.

Michael Brown, the senior market analyst at Caxton in London, stated that the recent bond market selloff is a first sign that the stock market might be tentatively buying into the reflation trade. Which, on the other hand, could have wide-ranging cross-asset implications.

Meanwhile, the United States accused Iran of interfering in the coming Presidential election, announcing that the country was behind threatening emails to Democratic-registered voters in battleground states. The U.S. also stated that Russia obtained voter registration data.

U.S. President Donald Trump and former Vice President Joe Biden will have their final debate on Thursday night after markets have closed.

Moreover, futures on the Dow Jones Industrial Average YM00, -0.15% tumbled down by 98 points. According to Chris Scicluna, Head of Research for Daiwa in London, the significance of the interference news to stock markets was that it might further encourage Donald Trump to dispute the outcome of the election.

European stocks lowered on Thursday after the United States accused foreign rivals of election interference. However, it seems there is some progress in the negotiations for a new stimulus deal for the U.S. economy. Earnings have mostly been better than anticipated as well.

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What about European stocks?

In Europe, the Stoxx 600 SXXP, -0.25% plummeted down by 0.6%, while the German DAX DAX, -0.31% declined by 0.7%. Furthermore, the French CAC 40 PX1, -0.16% and U.K. FTSE 100 UKX, -0.20% ended in the red as well.

Europe is still struggling with a surge in coronavirus cases. Over the last two weeks, the Netherlands, the Czech Republic, and Belgium have the highest infection rate per capita. Investors expect U.K. Chancellor Rishi Sunak to announce stimulus aid to companies caught up in the new restrictions placed on hard-hit regions.

However, the earnings season, for the most part, has exceeded analysts’ expectations. Still, International Airlines Group IAG, +1.69% dropped by 2% as it released worse-than-expected revenue in the third quarter, and declared that it wouldn’t meet its goal of breaking-even on cash flow in the fourth quarter.

On the other hand, Unilever ULVR, +0.31% climbed up by 1%, as it reported better-than-forecast revenue and maintained its dividend. Schneider Electric SU, 3.06% also surged forward by 3%.