Stock markets hesitant before knife-edge US election

NEW YORK – European and US stock markets dipped while the dollar slid on Monday as investors steel themselves for a coin-toss US presidential election, an interest rate decision and expected Chinese stimulus measures.
Oil prices rallied more than two percent after eight members of the OPEC+ group of producers said Sunday they would extend supply cuts until the end of next month.
They had been delaying output hikes on worries about slowing demand in China and the United States.
While Asian markets gained, tracking a positive lead from Wall Street ahead of the weekend, European markets were mostly lower and US markets wobbled.
Investors are looking for any hint of an advantage between the US presidential candidates as Democratic Vice President Kamala Harris and her Republican rival, ex-president Donald Trump, remain neck and neck in opinion polls ahead of Tuesday’s poll.
The dollar retreated against its main rivals Monday as a fresh survey in Iowa — which Trump won in 2016 and 2020 — showed Harris leading over the weekend.
A victory for Trump is seen as being positive for the dollar and pushing up Treasury yields owing to his pledges to cut taxes and impose hefty tariffs on imports.
Elections for the Senate and House of Representatives are also being closely watched amid speculation the Republicans could take control of both.
The election comes before the Federal Reserve is due to make its latest policy decision this week, with investors expecting a 25-basis-point reduction after a bumper 50-point cut at its last gathering.
With the candidates running neck-in-neck, little can be said with certainty.
The vote is of particular interest to China, where officials in Beijing are meeting this week to hammer out an economic stimulus.
Economists expect lawmakers to approve around one trillion yuan ($140-billion) in extra budget spending, mostly for indebted local governments, and a one-off one-trillion yuan payment for banks.
Hong Kong made gains and Shanghai was up more than one percent at the close. Tokyo was shut for a holiday.
In European trading, both Paris and Frankfurt ended the day lower but London bucked the trend to edge higher, with the Bank of England widely expected to cut its main interest rate on Thursday after inflation dropped below its target rate.
Oil prices also firmed after Iran’s supreme leader Ayatollah Ali Khamenei warned at the weekend that Israel and the United States “will definitely receive a tooth-breaking response” to Israeli attacks on October 26.