Market Talks covering the impact of U.S. Politics and White House policies on companies and markets. Published exclusively on Dow Jones Newswires throughout the day.
0156 ET - Janus Henderson Investors recognizes that elections indeed have consequences, but investors should maintain the perspective that what matters most for financial outcomes is compounding returns over longer horizons. "The upcoming U.S. midterms may bring political change, but the secular drivers of returns play out over multiple election cycles," says Seth Meyer, global head of client portfolio management, in a note. Midterm elections tend to be unfavorable events for the party in power and a Democratic victory in the House of Representatives would return the U.S. to divided government which would hardly be unusual, he says. (emese.bartha@wsj.com)
2231 ET - The U.S. midterm elections results could result in different responses among Asian currencies, says Ninghui Liu, head of investment strategy at State Street Investment Management. Overall, if the results bring lower U.S. yields and reduced policy uncertainty, Asian currencies could gain support, he says. But any reiteration of inflation concerns could keep the dollar firm, he notes. Still, how each Asian currency reacts could depend on the countries' energy-import dependence, external balances and exposure to technology demand, Liu says. The yen's response will depend on both risk sentiment and Japan's relative interest rates while the yuan would need to be assessed along with China's domestic economic outlook, he adds. (sherry.qin@wsj.com)
2148 ET - A Democratic victory at the U.S. midterm elections could weigh on Asia's AI-related stocks, BNP Paribas's William Bratton says in a note. A Democratic sweep could hurt AI sentiment given a greater subsequent focus on AI safety, testing and standards, the analyst says. A strong Democrat performance could also result in markets pricing in a potential 2028 "blue wave" with the subsequent scope for more substantial AI regulation, he notes. Given the exposure of northeast Asian equities to the U.S.-led AI supercycle, "this could be problematic," he says. However, as investors focus has already shifted to AI monetization, company earnings will be more important to the performance of the region's tech sector over the near- and medium-terms, he adds.(sherry.qin@wsj.com)
1741 ET - Apple says higher memory costs are squeezing margins. The company expects operating expenses in the current fiscal first quarter to be $20.4 billion to $20.8 billion, which would be ahead of the $20.26 billion analysts are anticipating. The higher costs are mainly related to rising memory prices, as well as some expenses related to ramping Siri AI, Chief Financial Officer Kevan Parekh tells analysts on a call. During the fourth quarter, which just ended, higher memory costs put pressure on the gross margin for both the overall company and the products business. Both margins would have been narrower had it not been for tariff refunds, Parekh says. (katherine.hamilton@wsj.com)
1645 ET - Apple beat Wall Street expectations on both its top and bottom line in the fiscal fourth quarter. The tech conglomerate got a boost from tariffs, which added about 1 percentage point to its 12% revenue growth and 5 cents a share to its earnings per share of $2.10. Both figures would have been ahead of analyst expectations, even without the boost from tariffs, however. Revenue was boosted by record-high sales in Apple's services business, as well as a strong showing for the iPhone. (katherine.hamilton@wsj.com)
1410 ET - A Democratic sweep in the midterm elections could curb the selloff in U.S. Treasuries but probably wouldn't fully reverse the rise in yields, Ebury market analyst Diego Barnuevo says in a note. The Iran war has added an inflationary risk premium across the yield curve. Meanwhile, inflation expectations remain elevated and corporate bond issuance to fund AI investment is adding to supply. A Democratic sweep would be neutral to mildly positive for the fiscal outlook, Barnuevo adds. "Congress could restrain Trump's expansionary agenda and, with it, the deficit." (jessica.coacci@wsj.com)
1256 ET - The $6.3 billion hack of Binance gives U.S. regulators a ready argument for strict custody and operational resilience standards for crypto exchanges, StoneX analyst Mark Palmer says in a research note. Policymakers are already implementing the Genius Act stablecoin regime and had been debating market-structure legislation before the Clarity Act stalled in the Senate, the analyst says. He says he expects the crypto space's regulated U.S. incumbents to lobby for a rule set that mandates qualified custody, segregation and independent signing controls, which would widen their competitive moats. (dean.seal@wsj.com)
0957 ET - The U.S. dollar could weaken if Democrats secure both houses of Congress in Tuesday's midterm elections as there is a high risk they will tighten AI regulation, FxPro's Alex Kuptsikevich says in a note. An AI clampdown would "provide yet another argument in favor of a sell-off in tech shares and will deal a blow to American exceptionalism and the dollar." A Republican defeat would, meanwhile, allow President Trump to shift his focus from domestic to foreign policy, where he has greater scope to operate, with investors fearing fresh uncertainty over issues including the Iran war and renewed trade wars, he says. The DXY dollar index falls 0.3% to 101.567 after earlier reaching a one-month low of 101.426. (renae.dyer@wsj.com)
0909 ET - Crude futures are tumbling to start the week on hopes for U.S.-Iran peace talks. The pullback comes with "escalation longs" at a peak so close to the U.S. midterm elections, Scott Shelton of TP ICAP says in a note. But "there is nothing I see to suggest that this any different that previous peace attempts, and the size of the move is because positions have never been larger as people have their bets on for what is going to happen post U.S. midterms," he adds. "This next step is either escalation or Iran capitulating." WTI is down 6.2% at $97.62 and Brent is off 6.1% at $106.57 a barrel. (anthony.harrup@wsj.com)
0859 ET - Treasury yields are mixed to start a momentous week. Investors are tracking midterm elections tomorrow to get a sense of how Washington will deal with its widening budget gap. The Treasury announces its quarterly refunding plan on Wednesday, when it is expected to indicate a shift toward more short-term borrowing. October's payrolls are due Friday and job creation is forecast to accelerate to 55,000 from 29,000, according to a WSJ poll. The 10-year yield slips to 4.917% from Friday's 4.928%, while the two-year rises to 4.612% from 4.579%. (paulo.trevisani@wsj.com; @ptrevisani)
0656 ET - For bond markets, the U.S. midterm elections are likely to trigger short-term market noise rather than a sustained repricing, Nuveen's Laura Cooper says in a note. "Their impact on the markets will depend largely on potential shifts in fiscal policy--a sphere where the scope for action appears limited, given the already strained debt dynamics and high financing costs," the head of macro credit and global investment strategist says. Historically, there is little evidence to suggest that midterm elections serve as a reliable indicator for Treasury yields, she adds. In the current bond market environment, a divided government might offer investors some reassurance by limiting the scope for further fiscal expansion and easing pressure on the long end of the Treasury curve, Cooper says. (emese.bartha@wsj.com)
0443 ET - The dollar falls to a one-month low against a basket of currencies as oil prices ease significantly. Renewed diplomatic efforts to end the U.S.-Iran conflict ease concerns over Middle East supply disruptions, sending Brent crude down 4% to 108.91 per barrel. Investors are also looking ahead to the U.S. midterm elections on Tuesday along with tech earnings this week and the all-important U.S. nonfarm payrolls report on Friday. The DXY dollar index falls to as low as 101.426. The euro rises to an 11-day high of $1.1237, according to LSEG. Sterling rises a near seven-week high of $1.3449.