ALBAWABA – Stocks and cryptocurrency investors are anticipating potential volatility ahead of the upcoming US election, according to Bloomberg.
Stocks and crypto volatility
According to Bloomberg, stocks and cryptocurrency experienced volatility during the month of October due to the upcoming US election, earning season, and Federal Reserve interest rate decisions.
Additionally, bond yields saw a significant increase after the Federal Reserve announced interest rate cuts last September, prompting investors to unwind some futures contracts and add extreme risk hedges against higher interest rates.
Traders are currently anticipating increased volatility as the yuan, Mexican peso, and euro are rising amid uncertainty over trade and tariffs.
Bloomberg anticipates that November will see mutual fund buying as companies repurchase shares and lower volatility encourages more buying. (Shutterstock)
“We continue to see an interest in trades around the election with a pickup in recent days. Clients who expect Donald Trump to win the election are adding exposure to financials and crypto stocks, those who are betting on a Harris win buy options on renewable-energy stocks. There’s also a pickup in hedging with traders piling into put options for the S&P 500 and QQQ ETF,” said Daniel Kirsch, head of options at Piper Sandler & Co.
Moreover, Bloomberg reported that basic market flows are expected to increase once the upcoming US elections conclude, potentially lasting until the end of 2024.
The agency anticipates that November will see mutual fund buying as companies repurchase shares and lower volatility encourages more buying.
Stuart Kaiser, a US equity trading strategist at Citigroup Global Markets Inc. said: “Positioning is pretty clean, after some general de-risking the past few weeks into the election and Fed meeting. That is good for risk/reward post-election depending on result of course. Bonds seem to be moving more than stocks.”
