US midterm elections results raise hope for an extended market rally: Crypto smashed
US equities were higher in choppy Tuesday afternoon trading, just off best levels as the market staged a late-afternoon rally. US midterm elections were the highlight of the day and expectations revolve around a divided Congress.
Ironically, stocks tend to outperform when there’s a divided government. Investors are inclined to like the notion of gridlock in Washington with a divided Congress and President because it will limit government spending, new taxes and regulations.
So it’s become a favourite data point among sell-side Wall Street historians. In the year after every midterm election since 1950, the S&P 500 has gone up, regardless of the party in power.
The Dow Jones Industrial Average gained 1 per cent. The S&P 500 was up 0.6 per cent and the Nasdaq Composite advanced 0.5 per cent. This was the third straight positive day for all three indexes.
Stocks came off their highs Tuesday afternoon, with the Nasdaq down 0.9 per cent at one point, amid a broader sell off in cryptocurrencies.
Bitcoin and other cryptocurrencies suddenly tumbled on Tuesday in Asia, driven by questions surrounding the balance sheet of Alameda Research, billionaire Sam Bankman Fried’s crypto trading house. Investors kept pulling assets from FTX, the exchange Bankman-Fried also runs, and sent its native token FTT diving as much as 32 per cent. FTX hit a valuation of $32bn at the start of this year.
The 48-hour crypto drama ended in shock Tuesday as Binance Holdings Ltd. agreed to acquire its most formidable rival, FTX.com, after helping whip up an investor exodus from billionaire Sam Bankman Fried’s three-year-old exchange. The sharp turn of events will reshape the more than $1 trillion industry amid a possibly prolonged market downturn.
Bitcoin, the most actively traded token, fell as much as 17 per cent while smaller coins faced steeper falls. US-listed crypto exchange Coinbase dropped about 14 per cent.
Crypto of course is a good indicator for investor risk sentiment
In company news, SolarEdge Technologies was the leading outperformer in the broader market index, up more than 18 per cent after reporting record revenue in its most recent quarter.
Meanwhile, shares of Lyft dropped 21 per cent on disappointing quarterly results. Take-Two Interactive and Tripadvisor slumped 12 per cent and 17 per cent, respectively, after reporting earnings.
And Nvidia (NVDA) will offer an alternative computer chip for China aimed at clearing new U.S. export rules. The new advanced chip has lower bandwidth to comply with restrictions and replaces a chip that is banned under new export rules. Shares closed just over 2 per cent higher.
Across the sectors, there was no real leadership overnight with materials the standout. Industrial & precious metals, lithium battery, chemicals, semis, and solar were some of the best performers.
In Australia, the press is running with expectations of a windfall profits tax on coal, gas and oil companies as the government looks to protect consumers from surging power prices. It makes political sense for the government to look at a properly constructed intervention into power pricing.
Currencies
One Australian dollar at 8:20 AM has strengthened compared to the US dollar yesterday, buying 65.09 US cents (Tue: 64.81 US cents).
Commodities
Iron ore is 1.3 per cent higher at US$89.05 tonne.
Iron ore futures are pointing to a 2.7 per cent gain.
Gold gained $35.20 or 2.1 per cent to US$1715.70 an ounce.
Silver jumped $0.52 or 2.5 per cent to US$21.44 an ounce.
Copper added $6.35 or 1.8 per cent to US$366.70 a pound.
Oil lost $2.50 or 2.7 per cent to US$89.29 a barrel.
Futures
The SPI futures are pointing to a 0.5 per cent gain.
Figures around the globe
Across the Atlantic, European markets closed higher. Paris added 0.4 per cent, Frankfurt gained 1.2 per cent and London’s FTSE closed 0.1 per cent higher.
In Asian markets, Tokyo’s Nikkei gained 1.3 per cent, Hong Kong’s Hang Seng lost 0.2 per cent and China’s Shanghai Composite closed 0.4 per cent lower..
Yesterday, the Australian sharemarket added 0.4 per cent to close at 6959.
Ex-dividends
CSR (ASX:CSR) is paying 16.5 cents fully franked
KMD Brands (ASX:KMD) is paying 2.2719 cents fully franked
NAOS Ex-50 Opportunities Company (ASX:NAC) is paying 1.4 cents fully franked
NAOS Small Cap Opportunities Company (ASX:NSC) is paying 1.25 cents fully franked
ResMed Inc (ASX:RMD) is paying 4.7305 cents unfranked
Waterco (ASX:WAT) is paying 5 cents fully franked
Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.
Copyright 2022 – Finance News Network
Source: Finance News Network
