World Week Ahead: Eyes on US voters

The US Presidential election forms the key event in the coming days, with recent polls indicating the race between Democrat Hillary Clinton and Republican Donald Trump was closer than previously thought.

Last week, the Dow Jones Industrial Average slid 1.5%, the Standard & Poor's 500 Index declined 1.9% and the Nasdaq Composite Index shed 2.8%.

Equities fell last week after FBI Director James Comey wrote a letter to Congress saying it was reviewing new evidence related to a previous completed investigation into Clinton's emails.

"The market has been pricing in a Hillary victory, and now with the introduction of the Comey letter, there's a stronger possibility that the base case doesn't happen," Phil Orlando, portfolio manager of the New York-based Federated Global Allocation fund, told Reuters.

On Friday, the S&P 500 closed lower for a ninth consecutive session.

"The US elections are the elephant in the room for markets at the moment," Christian Gatticker, Zurich-based head of research at Julius Baer Group, told Bloomberg. "The best case is gridlock where Hillary wins and works with a Republican Congress, while a worst case is a hung vote."

In an editorial published on Saturday, the New York Times reiterated its case for voting for Clinton. "The United States has seen worse than Donald Trump. It has endured political crises and corruption, war abroad and bloodshed at home. But that doesn't make it any easier to contemplate the catastrophe that looms if we wake up Wednesday morning to President-elect Trump."

Meanwhile, Friday's jobs data underpinned bets the Federal Reserve will raise its key interest rate next month. A Labor Department report showed that US payrolls rose by 161,000 in October, after a 191,000 advance in September that was larger than previously estimated. The jobless rate slipped to 4.9%, while average hourly wages posted the largest annual increase since June 2009.

"This is a good, solid report, consistent with the Fed moving in December and certainly consistent with 2% economic growth," John Silvia, chief economist at Wells Fargo Securities in Charlotte, North Carolina, told Bloomberg. "Growth across wages was strong, which is going to reinforce the Fed's view."

Fed vice-chairman Stanley Fischer on Friday warned  the central bank might "perhaps to some extent exceed" its employment and inflation targets.

"The labour market has, by and large, had a pretty good year," Mr Fischer said in prepared remarks for a speech at the IMF in Washington.

Economic data slated for release in the coming days include the labour market conditions index, and consumer credit, due today; NFIB small business optimism index, and JOLTS, due Tuesday; wholesale trade, due Wednesday; weekly jobless claims, due Thursday; and consumer sentiment, due Friday.

Speeches by Fed officials including Charles Evans, today, Neel Kashkari and John Williams on Wednesday, and James Bullard on Thursday, will be scrutinised for fresh clues on the timing of a hike.

In Europe, the Stoxx 600 Index fell 0.8% on Friday, bringing its slide for the week to 3.5%.

Here the latest economic clues will arrive in the form of eurozone retail sales and Sentix investor confidence, and German factory orders, due today; Germany industrial production and trade balance, due Tuesday; and German CPI, due Friday.

(BusinessDesk)