By David Randall
NEW YORK (Reuters) – Global equity benchmarks slipped and government bonds inched higher Tuesday as investors remained hesitant ahead of the first U.S. presidential debate and watched for progress in talks for further fiscal stimulus in Washington.
With time running out to change minds or influence undecided voters, the stakes are high as the main two White House candidates take the stage tonight, five weeks before the Nov. 3 election.
Former Vice President Joe Biden’s campaign has seized on a fresh line of attack on the eve of the debate with President Donald Trump – set for after the U.S. market close – accusing the Republican incumbent of gaming the system to avoid paying his fair share of taxes.
Many see a Biden victory increasing the chances of further fiscal stimulus to counter the economic damage from the COVID-19 pandemic, judging such a scenario a boon for stocks.
“What seems clear is that were you to see a blue wave, a Democratic sweep, you’d see substantial fiscal stimulus,” said Mike Bell, global market strategist at J.P. Morgan Asset Management. “The risk, I have always thought, to this recovery is premature fiscal tightening.”
“Tonight’s debate will be critical, since it represents one of the last set-piece opportunities for either candidate to change the contours of the race,” Deutsche Bank analysts wrote in a note.
MSCI’s gauge of stocks across the globe shed 0.03% following broad declines in Europe and Asia. Among the sectors in negative territory were growth-sensitive banks, automakers and travel & leisure, all down 0.8%-1.5%.
In morning trading on Wall Street, the Dow Jones Industrial Average fell 25.73 points, or 0.09%, to 27,558.33, the S&P 500 lost 3.18 points, or 0.09%, to 3,348.42, and the Nasdaq Composite dropped 14.25 points, or 0.13%, to 11,103.27.
As the global death toll from COVID-19 rose past 1 million, according to a Reuters tally, investors have remained focused on prospects for a stimulus package to help the U.S. economy recover from the damage wrought by the virus.
U.S. House of Representatives Speaker Nancy Pelosi said on Monday that Democratic lawmakers had unveiled a new, $2.2 trillion coronavirus relief bill. Pelosi in recent days has said she thinks a deal can be reached with the White House on a new coronavirus relief package and that talks were continuing.
Stimulus packages were also in focus in bond markets, where Germany’s 10-year bond yield fell to its lowest in seven weeks before first-estimate inflation readings for September.
U.S. benchmark 10-year notes last rose 2/32 in price to yield 0.6561%, from 0.663% late on Monday.
The dollar index fell 0.05%, with the euro up 0.27% to $1.1695.
Oil prices slipped as investors remained hesitant to take on risk.
U.S. crude dropped 1.38% to $40.04 per barrel and Brent was at $42.28, down 0.35% on the day.
(Reporting by David Randall; Editing by Steve Orlofsky)