U.S. stock markets are in limbo ahead of the elections and a Federal Reserve policy announcement. In premarket trading, the S&P 500 remained unchanged, while the Dow Jones and Nasdaq dipped by 0.1%. The election could have significant effects on the global economy and international relations. Investors are preparing for potential market volatility until the election results are confirmed, which might take days or even weeks.

Meanwhile, the Federal Reserve's meeting will wrap up on Thursday, with a 25 basis point interest rate cut anticipated, regardless of the election outcome. The Bank of Australia and the Bank of England will also reveal their rate decisions this week.

In corporate news, Tesla's shares dropped by 2% pre-market due to a 5.3% decline in China-made electric vehicle sales in October. Nvidia rose by 2% and is set to replace Intel in the Dow Jones index on November 8. Companies like Constellation Energy, Zoetis, and Marriott International reported earnings before the market opened, while Vertex Pharmaceuticals and Palantir Technologies will release theirs after the close. In Europe, Novo Nordisk, Unicredit, BMW, Zurich Insurance, and Compagnie Financière Richemont are publishing their results today. The U.S. earnings season is slightly below average, with 70% of S&P 500 companies having reported.

Back to the presidential election. Four years ago, I was at this very desk, trying to predict the 46th President. The expected blue wave didn't materialize, and the media speculated about a second Trump term. It wasn't until the day after the November 3 vote that Joe Biden was declared the winner. Even then, it took until the following weekend for the Electoral Commission to officially endorse him, with his victory immediately contested by his opponent. Fast forward four years, and Donald Trump is back, vying for a second term. The vote is tomorrow, November 5, and the outcome remains uncertain. Financial experts believe markets will move forward regardless of the White House's new resident, whether Democrat or Republican. However, the market dynamics could vary. For instance, green finance and renewable energy might flourish under a Trump presidency. His isolationist policies could boost inflation, limiting the Fed's interest rate flexibility. Remember, Wall Street prefers a presidency balanced by at least one house of Congress. Historically, the best market performances occur when power is divided.

The dollar has weakened as Kamala Harris's ratings have risen. The U.S. 10-year yield jumped to 4.38%. On Friday, stock markets rebounded after a U.S. sell-off on Thursday. In Europe, the French CAC40 recovered by 0.8%, climbing above 7,400 points. Despite this, the Paris index remains in the red for 2024, trailing behind its peers since China's middle class reduced their Vuitton purchases, impacting the luxury sector. Elsewhere in Europe, Frankfurt, Brussels, Madrid, and Milan have posted gains of around 15% in 2024.

In other news, OPEC+ delayed its production increase to the end of December, with oil prices barely reacting. Berkshire Hathaway reported a $325 billion cash surplus over the weekend. Why is Warren Buffett's firm so cautious? My colleague Tommy Douziech explores this in his latest piece. In the Asia-Pacific, Japan's market is closed for a holiday. Tomorrow, Tokyo will extend its trading hours by half an hour, closing at 3:30 PM local time. Chinese indices are on the rise, with the Hang Seng up 0.3% and the CSI300 up 1.1%. South Korea follows the Nasdaq, gaining 1.8%. The trend is positive in Australia (+0.5%) and Taiwan (+1.3%). India, however, faced a setback, with the NIFTY 50 dropping 1.2%. European indices are indecisive, with the STOXX EUROPE 600 hovering around zero.

Today’s economic highlights:

On the calendar today, manufacturing PMIs for France, Germany and the eurozone. In the US durable goods orders and industrial orders are released. The full agenda here.

The dollar is down to EUR 0.9175 and GBP 0.7711. The ounce of gold is worth to USD 2,741. Oil regained some ground, with North Sea Brent at USD 74.75 a barrel and US light crude WTI at USD 71.04. The yield on 10-year US debt stands at 4.23%. Bitcoin is hovering around USD 68,700.

In corporate news:

  • Tesla's shares fell by 2% pre-bell due to a reported 5.3% decline in China-made electric vehicle sales in October.
  • Viking Therapeutics surged following promising clinical trial results for its weight loss treatment.
  • Berkshire Hathaway reported a 6% drop in operating profit for Q3 and sold 100 million Apple shares, reducing its stake by 25%.
  • Nvidia and The Sherwin-Williams chase Intel and Dow Inc out of the Dow Jones from 8 November.
  • Striking workers at Boeing are again called upon to vote on a draft social agreement on Monday.
  • KKR is considering investing in Thames Water, according to Sky News.
  • ISS recommends that Frontier Communications shareholders abstain from voting on Verizon's takeover bid.
  • Walt Disney is creating a business unit to coordinate the use of AI and augmented reality.
  • Blackstone is in advanced talks to acquire shopping center owner Retail Opportunity, according to Reuters.
  • New York loses case against PepsiCo over plastic pollution.

Today’s main earnings reports: Vertex Pharmaceuticals, Palantir Technologies, Zoetis, Constellation Energy, Marriott, NXP Semiconductors, Illumina, BioNTech, Brookfield Asset Management, Hologic, Fox Corporation...

Analyst recommendations:

  • Corning Incorporated: Baptista Research downgrades to hold from outperform with a price target raised from USD 43.60 to USD 53.20.
  • Danaher Corporation: Wolfe Research upgrades to outperform from peerperform with a target price of USD 285.
  • Entergy Corporation: Morgan Stanley upgrades to equalwt from underwt with a price target raised from USD 116 to USD 150.
  • Keysight Technologies, Inc.: Barclays upgrades to overweight from equalweight with a price target raised from USD 158 to USD 180.
  • Kraft Heinz: DZ Bank AG Research upgrades to buy from hold with a target price raised from USD 37 to USD 38.
  • Nnn Reit, Inc.: BNP Paribas Exane downgrades to underperform from neutral with a target price reduced from USD 46 to USD 44.
  • Paypal Holdings, Inc.: Baptista Research upgrades to outperform from buy with a price target raised from USD 77.20 to USD 89.10.
  • Roblox Corporation: Morgan Stanley upgrades to overweight from equal weight with a price target raised from USD 38 to USD 65.
  • Royal Caribbean Group: Baptista Research downgrades to hold from buy with a price target raised from USD 182.20 to USD 221.80.
  • Booking Holdings Inc.: Citigroup maintains its buy recommendation with a price target raised from USD 4100 to USD 5500.
  • Bwx Technologies, Inc.: CLSA maintains its outperform recommendation and raises the target price from USD 116.952 to USD 150.
  • Carvana Co.: Jefferies remains at a hold recommendation with a price target raised from USD 185 to USD 230.
  • Charter Communications, Inc.: Pivotal Research Group maintains its buy recommendation and raises the target price from USD 435 to USD 525.
  • Estee Lauder: B Riley Securities Inc. maintains a neutral recommendation with a price target reduced from USD 95 to USD 70.
  • Humana Inc.: Wells Fargo maintains its overweight recommendation and reduces the target price from USD 387 to USD 290.
  • Salesforce.com, Inc.: Evercore ISI maintains its outperform recommendation and raises the target price from USD 300 to USD 400.
  • Toast, Inc.: Deutsche Bank maintains its hold recommendation with a price target raised from 24 to USD 30.
  • Wayfair Inc.: Citigroup maintains its buy recommendation and reduces the target price from USD 70 to USD 54.
  • 3I Group Plc: RBC Capital downgrades to sector perform from outperform with a target price of GBX 3425.
  • Burberry Group Plc: AlphaValue/Baader Europe downgrades to reduce from sell with a price target raised from GBX 638 to GBX 785.
  • Frasers Group Plc: RBC Capital upgrades to outperform from sector perform with a target price of GBX 1050.
  • Fresnillo Plc: Canaccord Genuity upgrades to hold from buy with a price target raised from GBX 680 to GBX 760.
  • Reckitt Benckise: Bernstein downgrades to market perform from outperform with a price target reduced from GBX 6000 to GBX 5300.