• US dollar and gold remain elevated as markets bet on Trump win
• But Nasdaq hits record amid optimism about tech earnings
• Slew of data awaited out of the US and Eurozone, UK budget also eyed

US election angst still driving sentiment  

Growing anxiety about the US presidential election continued to set the market mood on Wednesday, with Republican candidate Donald Trump extending his gains in the polls. With less than a week to go till voting day, the race between Trump and his Democratic rival, Kamala Harris, is as tight as ever.

Despite pledges for lower taxes and less regulation, markets are nervous about the prospect of Trump returning to the White House

Despite pledges for lower taxes and less regulation, markets are nervous about the prospect of Trump returning to the White House amid his chaotic and confrontational style of leadership. More specifically, Trump’s policies are seen as being inflationary for the US economy, particularly his promise of higher tariffs.

US Treasury yields have surged since Harris’s lead over Trump in the polls started to narrow. The 10-year yield hit a near four-month high of 4.339% yesterday on the expectation that inflation will be higher under Trump. But it later pulled back as investors await today’s announcement by the Treasury Department on its refunding plans for the next quarter.

Gold and bitcoin shine

The selloff in Treasuries appears to have benefited gold the most. The precious metal has been setting record high after record high since March, mainly on the back of heightened geopolitical tensions in the Middle East. But more recently, the uncertainty about the US presidential race had added even more fuel to the rally.

The uncertainty about the US presidential race had added even more fuel to gold's rally

Bitcoin is another notable winner from the increased bets of a Trump win. The world’s largest crypto by market cap has soared by more than 6% this week on the hope that a Trump presidency would reduce regulatory scrutiny over digital assets.

Double boost for the dollar

Unsurprisingly, the US dollar has been on the rise too. Aside from the recovery in yields from more than one-year lows, the ongoing resilience of the US economy has also bolstered the greenback as investors have had to scale back their expectations of how aggressively the Fed will cut rates over the coming year.

The Fed meets next week and will likely trim rates for a second time this year. But its hints on future cuts will matter more. Ahead of the meeting, however, there’s a barrage of key economic indicators out of the US that will shape expectations, starting with today’s advance GDP estimate for the third quarter.

Data lifts euro and aussie, pound awaits budget

The euro is extending this week’s gains, edging up to $1.0840 ahead of the Eurozone’s flash GDP readings for Q3 and after Germany’s figures surprised to the upside.

The pound has also recouped some losses versus the dollar this week as it braces for the Labour government’s first budget. UK chancellor, Rachel Reeves, will present her budget at 12:30 GMT and it’s expected that there will be big tax increases.

If markets sense that the tax burden on business will be too heavy and there aren’t enough growth boosting measures, the pound is likely to fall as it would set the tone for a dovish Bank of England meeting next week.  

If markets sense that the tax burden on business will be too heavy the pound is likely to fall as it would set the tone for a dovish Bank of England

The Australian dollar, meanwhile, was lifted by hotter-than-expected CPI data that dashed hopes of an RBA rate cut before Q2 2025.

Tech stocks outperform again as earnings impress

On Wall Street, higher yields weighed on the Dow Jones and to a lesser extent, the S&P 500. But the Nasdaq 100 finished Tuesday’s session at a new all-time high as tech stocks rallied. There’s likely to be further gains today as Alphabet’s stock surged in after-hours trading after the company posted earnings that were well above estimates.

Big Tech earnings will continue in earnest today with Microsoft and Meta Platforms. They are scheduled to report after Wall Street’s closing bell.