Equities Advance as Investors Assess Prospects for Gridlock

Equity traders appear to be embracing the prospect of political gridlock following what appears to be a decisive Democratic midterm election win. Latest projections suggest majorities of approximately 55-45 in the Senate and 250-185 in the House, alongside governorship gains in states including Texas and Ohio. Sentiment turned positive overnight as the scale of the projected victory appeared to ease concerns about contested results and post-election uncertainty. Stocks associated with Elon Musk remain under pressure, with Tesla and SpaceX down 4.9% and 7.3%, respectively, in premarket trading. Declines in Energy prices and the US Dollar may also reflect expectations of a reduced near-term risk of escalation in the Middle East.

US ADP Payrolls exceeded expectations (86K vs Street 69K and previous 90K). Services PMI reports were mixed, with Germany and Australia exceeding expectations while France and the UK disappointed. Advanced Micro Devices ($2.09 vs Street $1.95) and Super Micro Computer ($1.81 vs Street $1.28) beat earnings expectations, with their shares up 1.8% and 5.0%, respectively, premarket. Booking Holdings ($4.66 vs Street $4.49) and Suncor Energy* ($2.79 vs Street $2.49) also exceeded expectations. CVS Health beat forecasts ($2.09 vs Street $1.65) and announced plans to separate its insurance and benefits businesses from its drug stores into two companies; its shares are down 1.6% premarket.

US ISM Services PMI (Street 54.8) is due at 10:00 am EST, followed by the Bank of England tomorrow, when a 0.25% benchmark rate increase to 4.00% is widely expected. North American employment reports are due Friday. Earnings headliners later today include Cenovus Energy*, Manulife Financial*, MetLife, Great West Life, Nutrien, Qualcomm and Sun Life. Thursday brings Canadian Natural Resources*, TC Energy, ConocoPhillips*, Bombardier and Airbnb, followed by Brookfield, Telus, Enbridge and Constellation Software on Friday.

NASDAQ futures are up 0.2%, while Dow futures are up 1.8%.

In Asia, the Nikkei fell 1.4%, while the Hang Seng gained 1.7%. European markets are advancing, with the DAX up 1.5% and the FTSE up 1.6%.

Crude Oil is down 1.7%, trading below $95.00/bbl, while Brent Crude is down 1.7%, trading near $102.00/bbl. Gasoline is up 1.5%, trading below $2.90/gallon. Gold is up 2.8%, trading toward $4,050/oz, while Copper is up 0.1%, trading near $6.40/lb, and Silver is up 4.1%. The US Dollar Index is down 0.6%, with the Euro up 0.7% and the Loonie up 0.6%. The US 10-year Treasury note yield is trading near 4.90%, while the US 30-year Treasury note yield is near 5.30%.

Shares of Suncor Energy, Manulife Financial, Cenovus Energy, Canadian Natural Resources and ConocoPhillips are held in some portfolios managed by SIA Wealth Management.

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