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S&P Gains as Election Looms

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U.S. share benchmarks jumped in early trading Monday ahead of an election that will shape the government’s response to the coronavirus pandemic and economic downturn.

The S&P 500 advanced 1.1%, following the broad measure’s worst week since March. The tech-heavy Nasdaq Composite Index rose 0.9%. The Dow Jones Industrial Average added 359 points, or 1.4%.

Oil prices fell further on concerns that international lockdowns will sap energy demand.

Some investors appeared to believe the market was oversold after last week’s rout, boosting equities on Monday.

“We could see some buying back, with some investors seeing this as a buying opportunity given the huge sell off that we had last week,” said Sean Markowicz, strategist at Schroder Investment Management.

Tech stocks could do well Monday given that the companies’ shares were dragged down last week by the broad selling even after their largely positive earnings reports, Mr. Markowicz said. “They are set for erasing some of those losses that they’ve taken these past few days. It’s also likely that, with a renewed lockdown in Europe, they’re probably going to see increased demand for their services” as people continue to shop online and rely on digital infrastructure for remote working, he said.

Former Vice President Joe Biden is leading President Trump by 10 percentage points among voters nationally in the final days of the election campaign, according to a new Wall Street Journal/NBC News poll. Investors have been hoping for a definitive result in the presidential race, helping avoid a contested outcome, and clear control of the Senate and House by the same major party. That would lead to more clarity on additional stimulus packages and new legislation on health care and taxes.

New lockdown measures introduced in the U.K., France, Germany, Ireland, Austria and Belgium to contain the pandemic have also been less restrictive than some investors expected, and for a shorter duration. Schools by and large remain open, and governments have expressed hope the new restrictions will be lifted within weeks.

“They are definitely what I’d call lockdown light: not as stringent as what we saw in the first wave,” said Justin Onuekwusi, fund manager and head of retail multiasset funds at Legal & General Investment Management. “That has to be a positive for the economy and markets overall.”

In Europe, the pan-continental Stoxx Europe 600 advanced 1.4%, led by stocks in Germany and France. The gauge and the Euro Stoxx 50 failed to show prices for about an hour after markets opened Monday due to issues with index calculation, according to the operator.

New lockdown measures introduced in the U.K., France, Germany and other European countries have been less restrictive than some investors expected. A shop in Paris last week.

New lockdown measures introduced in the U.K., France, Germany and other European countries have been less restrictive than some investors expected. A shop in Paris last week.

Photo: ian langsdon/Shutterstock

Investors are operating on the assurance that governments are prepared to pump stimulus into the economy, said Alan Custis, managing director of Lazard Asset Management. There is also a better understanding of how to cope with the coronavirus, and markets know which companies are likely to perform better or worse under lockdown restrictions, he said.

In bond markets, the yield on the 10-year Treasury edged down to 0.848%, from 0.858% on Friday.

Brent crude, the international benchmark for oil, fell 0.4% to $37.78 a barrel. Oil markets have been under pressure in recent days as renewed restrictions sap energy demand. The gauge fell more than 10% last week, logging its worst week since April.

A new WSJ/NBC News poll finds former Vice President Joe Biden leading President Trump 52% to 42% among registered voters. But as WSJ’s Gerald F. Seib highlights, results show the race is tightening in 12 battleground states. Photo: (L) Scott Hasse/Zuma Wire; (R) Brian Snyder/Reuters

In addition to lower demand, oil prices could suffer further due to pent-up supply, according to Daniel Gerard, senior multiasset strategist at State Street Global Markets. Libya recently negotiated an end to an eight-month blockade of its supply, while data from the Energy Information Administration showed surprise inventory increases in the U.S. in late October.

“The dynamic has been pretty poor for the oil industry,” Mr. Gerard said. “Even with any improvement in sentiment for demand, supply will more than likely outpace demand.”

The Institute for Supply Management will release its survey of purchasing managers at factories at 10 a.m. ET. The data are expected to show another month of expanding activity in October. Strong demand for consumer goods and capital equipment has driven a manufacturing rebound after coronavirus-related disruptions depressed output this spring.

A string of companies will report earnings later in the day, including PayPal Holdings and Mondelez International after the market closes.

Shares of
Clorox
gained 3.4% after posting sales that beat analysts expectations during the recent quarter.
Estee Lauder Companies
shares jumped 5.5% after quarterly profit and sales came in above Wall Street’s forecasts. In Asia, Japan’s benchmark Nikkei 225 added 1.4% by the closing of trading, while Hong Kong’s Hang Seng rose 1.5%.

“Investors are viewing Asia as a safe haven ahead of a good probability that we could see a contested election,” said David Chao, Invesco’s global market strategist for Asia-Pacific excluding Japan.

A return to lockdown measures in Europe, amid a resurgence of coronavirus cases, is also pushing investors into markets where Covid-19 is contained, Mr. Chao said.

Corrections & Amplifications

The Institute for Supply Management will release its survey of purchasing managers at factories at 10 a.m. ET. An earlier version of this article incorrectly said the data would be released at 9:45 a.m. (Corrected on Nov. 2)

Write to Frances Yoon at frances.yoon@wsj.com

A Global Asset Management Seoul Korea Magazine

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