Breakfast | U.S. Election Decision Day! Deutsche Bank: Will Determine the Direction of the World for the Next Four Years

Market Overview

On the eve of the U.S. election, the three major U.S. stock indices retreated, with Intel falling nearly 3% leading the Dow Jones, and NXP Semiconductors, which reported disappointing earnings, dropping nearly 7% in after-hours trading; Chinese concept stocks outperformed the market, with the Chinese concept stock index rising over 3% at one point, and Yum China, which performed well in the third quarter, closing up over 7%, while XPeng rose nearly 5%.

The "Trump trade" cooled down, with traders reducing their bets on Trump's election. The yield on the 10-year U.S. Treasury bond briefly plunged over 10 basis points; the U.S. dollar index fell to a two-week low, and Bitcoin dropped over $2,000 during the session, falling below the $68,000 mark; the offshore yuan rose nearly 500 points during the session, breaking above 7.09 to reach a three-week high, but later retraced about half of its gains.

Most commodities rose, with oil climbing for four consecutive days to a one-week high after OPEC+ delayed production increases, rising over 3% during the session; meanwhile, gold slightly turned down during the session.

Focus on the Election

Trump and Harris made a final push in swing states on the eve of the election. Harris and Trump targeted battleground states, with over 78 million Americans having cast their votes, including 17.9 million in seven battleground states. Harris will spend the election eve in Pennsylvania. Trump will head to North Carolina, Pennsylvania, and Michigan.

Polls in Iowa unexpectedly showed Harris leading Trump 47% to 44%. With the election extremely close, swing states are crucial. New polls over the weekend and profit-taking in the betting markets cooled the "Trump trade," but after initially dropping over 5%, Trump Media turned positive, surging 17% in the afternoon, and is currently up nearly 9% in after-hours trading.

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Citigroup strategists pointed out that compared to the sharp declines seen in previous election eves, U.S. stocks have performed relatively stable over the past month. Investors have not engaged in defensive positioning or reduced risk in their portfolios as they have in the past, despite unclear poll results. The VIX index, which measures stock market volatility, is declining, indicating that traders are less concerned about the election results. This anomaly is largely due to investors' optimism that the Federal Reserve will continue to cut interest rates, outweighing concerns about the election, while expectations for a shallow slowdown in the U.S. economy persist.

Morgan Stanley believes that if Trump wins, the yield on the 10-year U.S. Treasury bond will set the tone for the market after the U.S. election. If yields stabilize or rise slightly by no more than 20 basis points, financial and industrial stocks may outperform the market. If yields rise significantly, market risk aversion may increase, and tariff-sensitive consumer stocks may perform poorly.

Morgan Stanley predicts that due to the market's sigh of relief following the U.S. presidential election, combined with the potential "fear of missing out" (FOMO) psychology that may arise at the end of the year, the S&P 500 index is expected to reach around 6,000 points by year-end, and may even touch 6,100 points. JP Morgan stated that once the U.S. election results are settled, even in the event of a political deadlock, the U.S. stock market is expected to see a final wave of gains in 2024. Goldman Sachs trading desk indicated that regardless of market trends, it expects commodity trading advisors (CTAs) to sell U.S. stocks and global equities.

Trump Media & Tech Group DJT closed up 12.37% overnight, continuing to rise in after-hours trading, at one point up 9%

On Monday, the stock opened lower, but gradually turned upward as the situation of the U.S. election developed. In terms of news, the latest polls show that Harris is expected to win the votes in Iowa. Given that Trump won Iowa in the previous two elections, if Harris wins the state, it could mean a reshaping of the campaign landscape.

Nvidia's Market Value Temporarily Reclaims Global Top Spot, But Opens High and Closes Low

On Monday, Nvidia, the top stock by trading volume in the U.S. market, rose 0.48%, with a trading volume of $25.358 billion. The company briefly surpassed Apple during the day to become the world's most valuable company again.

After the U.S. stock market closed last Friday (November 1), S&P Dow Jones Indices announced that it would adjust the Dow Jones Industrial Average, with Nvidia replacing its competitor Intel as one of its 30 components, effective after the market closes this Friday (November 8).

S&P Dow Jones Indices stated that the adjustment of the components is to ensure that the index has a more representative exposure to the chip industry. It is estimated that Nvidia holds about 80% of the market share in the artificial intelligence chip sector, which is primarily used in data centers of large cloud computing operators.

Tesla Falls Nearly 2.5%, October Deliveries Below Expectations

Tesla closed down 2.47%, with a trading volume of $16.644 billion. Tesla's delivery volume at its Shanghai factory in China declined in October. According to preliminary data released by the China Passenger Car Association (CPCA) on Monday, Tesla delivered 68,280 Model 3 sedans and Model Y SUVs last month, a year-on-year decrease of 5.3%, and a sharp drop of 23% compared to September.

Nuclear Power Stocks Plummet, CEG Drops Over 12%, But Solar Stocks Generally Rise

Constellation Energy (CEG) closed down 12.46%, with a trading volume of $2.455 billion. The stock prices of nuclear power companies like Constellation Energy fell due to the U.S. Federal Energy Regulatory Commission (FERC) not reaching an interconnection agreement with Amazon's data centers.

FERC Commissioner Mark Christie stated that this transaction could increase public electricity costs and affect grid reliability. He said, "The co-location arrangement proposed here raises a series of complex, subtle, and multifaceted issues that could have a significant impact on grid reliability and consumer costs."

However, solar stocks generally rose, with Array Technologies up 12.09%, Sunrun up over 8.9%, Canadian Solar ADR up over 5.5%, solar inverter supplier Enphase Energy up about 4.7%, First Solar up about 3.6%, and JinkoSolar ADR up over 1.7%.

U.S. Weight Loss Drug Concept Stocks Generally Decline, VKTX Soars Then Plummets

Viking Therapeutics' oral weight loss drug exceeded expectations, with the stock price rising over 8.5% before closing down 13.36%. AstraZeneca stated that its oral weight loss drug could reduce weight by nearly 6%, rising nearly 3.2% before closing up 0.01%, briefly turning negative during the day. Competitor Eli Lilly, a manufacturer of injectable weight loss drugs, fell 1.6%, while Novo Nordisk dropped 2%

NXP Semiconductors Q4 Performance and Guidance Below Expectations—Decline in Automotive Industry Weighs, Drops Over 6% After Hours

NXP Semiconductors reported Q3 revenue of $3.25 billion, while analysts expected $3.26 billion. The expected Q4 EPS is $2.26-$2.66, with analysts predicting $3.36. The expected adjusted Q4 EPS is $2.93-$3.33, while analysts forecast $5.62. The expected Q4 revenue is $3.0-$3.2 billion, with analysts anticipating $3.36 billion.

ByteDance's Revenue Grew 35% Year-on-Year to Approximately $73 Billion in the First Half of the Year, with International Revenue Growing Over 60%