By Callum Keown
The gloomy mixture of COVID-19 fears and political uncertainty are on investors’ minds early on Tuesday.
The global coronavirus death toll has now passed 1 million , according to Johns Hopkins University, which United Nations Secretary-General António Guterres described as “an agonizing milestone.” Many regions around the world are still reporting rising numbers of infections, also fueling fears over the impact of a second wave.
Investors are anxiously awaiting the first presidential debate between President Donald Trump and Democratic challenger Joe Biden, which is expected to attract a record-breaking television audience from 9 p.m. Eastern time on Tuesday night.
In our call of the day , Goldman Sachs /zigman2/quotes/209237603/composite GS -0.98% strategists said they remained ‘pro-risk’ but warned risky assets may be stuck in a ‘fat and flat range’ unless election uncertainty eased.
Markets have generally been ‘risk off’ over the past week, they said, as COVID-19 cases rise and the likelihood of a vaccine by the first quarter of 2021 has diminished.
“While we retain a fairly pro-risk stance in our asset allocation, volatility is likely to remain elevated in the near term — risk assets might continue to be stuck in a ‘fat and flat’ range,” the investment bank’s portfolio strategy research team wrote in a note late on Monday.
The team said it would take more investor optimism around growth for stocks and other risky assets to breakout in a more sustained way. That would “likely require falling uncertainty around the U.S. election and positive vaccine developments,” said the strategists, led by Christian Mueller-Glissmann.
With the eyes of the world set to be on Trump and Biden later on Tuesday, the Goldman strategist said the first debate could be an “important catalyst for investors to assess risks.”
Saxo Bank strategist Eleanor Creagh said, given Biden’s lead in the polls, a strong showing in the debate could raise expectations of a Democratic clean sweep. “One way to lower the odds of a contested outcome (that brings noise and volatility) is via a large margin of victory that cannot be undermined,” she said.
“Although undoubtedly under the clean-sweep scenario there is the negative implications for risk assets to be considered, stemming from a Democratic legislative agenda including higher corporate taxes and increased capital-gains taxes,” Creagh added.
After climbing 410 points on Monday, the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +1.60% was 0.6%, or 166 points lower in late morning trading. The S&P 500 /zigman2/quotes/210599714/realtime SPX +1.70% slipped 0.5% and the Nasdaq /zigman2/quotes/210598365/realtime COMP +1.26% was 0.2% down.
European stocks also fell , as political uncertainty and fears of a second wave of the coronavirus pandemic concerned investors. The pan-European Stoxx 600 XX:SXXP was 0.3% lower in early trading, after enjoying its best one-day advance since June 22 on Monday. Asian markets were mixed overnight despite Wall Street’s gains.
Data-mining software company Palantir Technologies , and workplace collaboration and planning software provider Asana are expected to go public on Wednesday via the first direct listings of 2020, according to reports.
French luxury goods giant LVMH /zigman2/quotes/201350549/delayed FR:MC -2.00% countersued Tiffany & Co on Monday, claiming the U.S. jeweler has been so badly damaged during the pandemic that the planned $16 billion takeover agreement is invalidated.
Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi agreed to keep talking on pandemic-related aid for the economy, even as House Democrats unveiled their own $2.2 trillion bill.
Democratic vice-presidential nominee Kamala Harris said Trump and his Supreme Court nominee Amy Coney Barrett would overturn Obamacare , in a speech on Monday.
United Airlines /zigman2/quotes/205037281/composite UAL -3.36% said it has secured a deal to avoid furloughing pilots before next summer, reducing planned compulsory layoffs by about a quarter to under 12,000 — if more federal aid isn’t forthcoming.
Uber is considering buying the ride-hailing app Free Now from automotive makers Daimler /zigman2/quotes/201850364/delayed XE:DAI -0.51% and BMW /zigman2/quotes/202432319/delayed XE:BMW -0.81% to boost the technology company’s presence in Europe and Latin America, Bloomberg News reported.
Parrots removed from U.K. wildlife park after swearing at visitors , having taught each other bad words during isolation.
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