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Global stock markets are on track to end the week lower due to uncertainty surrounding upcoming events such as Japan’s election and the U.S. data release. The Federal Reserve’s stance on Interest rates and the tight U.S. election race have also contributed to the subdued market sentiment. Despite some stability in MSCI’s world equity index on the day, it is heading for a 1.2% decline for the week.

U.S. Treasuries saw buying interest on Friday but are set for their sixth consecutive weekly loss. Wall Street futures indicated modest gains later in the day, European shares remained flat, and the dollar stayed near three-month highs. Key events on the horizon include Japan’s election and the U.S. payrolls report on Friday, along with earnings reports from tech giants such as Alphabet, Amazon, and Microsoft. The U.S. presidential election and a Fed rate decision are also scheduled for early November, adding to market uncertainty.

Market participants have been weighing the potential outcomes of the U.S. election, with concerns about a contested result leading to heightened volatility across markets. Investors are closely monitoring the race between Donald Trump and Kamala Harris, with the possibility of social unrest and geopolitical risks in the event of an unclear outcome.

Market indicators have reflected growing caution among investors, as seen in the rise of bond market volatility and euro volatility. Gold prices slipped after hitting a record high earlier in the week, while U.S. unemployment aid data pointed to a mixed economic outlook. The Fed’s rate decision in September saw a 50 bps cut, but expectations for a significant rate cut in the upcoming meeting have waned.

In Japan, the ruling Liberal Democratic Party faces a challenging election, potentially leading to a coalition government that could impact the Bank of Japan’s monetary policy. The Japanese yen has weakened in recent weeks, prompting officials to caution against betting against the currency. Hong Kong and Chinese Stocks saw gains, while oil futures also rose.

Overall, market sentiment remains cautious as investors brace for upcoming events that could sway global markets in the coming weeks.

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