SINGAPORE (Nov 5): US stocks rallied for a second day on Oct 31, concluding a largely disappointing month on an upbeat note. The Standard & Poor’s 500 index capped its biggest two-day surge since February, paring its biggest monthly decline since 2011 to 7%. Big-tech shares that bore the brunt of the October rout led the Oct 31 rebound, with Netflix and eBay surging more than 5%. The clutch of “FANG” stocks also rallied after Facebook’s earnings beat expectations.

The US midterm elections are taking place on Nov 6 and Eli Lee, Bank of Singapore’s head of investment strategy, is betting on Democrats to win control of the House of Representatives, but the Republicans retaining the Senate. A divided Congress would further diminish chances of additional fiscal stimulus, which already appears unlikely, says Lee.

“Because our base case is in line with market expectations, we see this outcome to be mostly priced in, and market reactions to this result are likely to be ­muted,” says Lee in a strategy report on Oct 31. Regardless of the midterm outcome, he emphasises that the elections will not bode well for US-Sino trade tensions, considering how the US trade agenda enjoys bipartisan support.

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