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U.S. stocks look set to close out the first monthly decline since March on Wednesday following a chaotic Presidential debate that once again raises the risk of a contested election in November.

The Wednesday Market Minute

  • Global stocks slide following a chaotic Presidential debate during which President Donald Trump once again refused to commit to a peaceful transition of power.
  • President Trump, and former Vice President Joe Biden traded insults and interruptions in an unedifying 90 minute spectacle that likely changed the minds of very few voters.
  • Germany is using targeted restrictions to tame a resurgent coronavirus, and hopes to avoid a nation-wide lockdown, as the pandemic continues to spread across Europe.
  • Oil prices drift lower as the dollar rallies in safe-haven trading ahead of EIA data on domestic inventory at 10:30 am Eastern time.
  • U.S. equity futures weaker open on Wall Street, and the first monthly loss since March, ahead of ADP jobs data and a final Q2 GDP reading at 8:30 am Eastern time.

U.S. equity futures extended declines Wednesday, while the dollar pushed higher and safe-haven assets rallied, as markets reacted to a bitter and chaotic Presidential debate that once again raised the prospect of a contested election in November.

President Donald Trump and former Vice President Joe Biden traded insults, jabs, interruptions and exasperation in an unedifying televised clash that is unlikely to change the minds of the few voters that managed to sit through the 90 minute spectacle.

While neither candidate was able to land more than a glancing blow on his opponent, and few if any policy ambitions were revealed, President Trump did once again raise the prospect of an extended election challenge when he refused to commit to a peaceful transition of power if he lost in November.

Those remarks, as well as the bitter, partisan nature of the debate that was on display for the rest of the world, turned U.S. equity futures lower in overnight trading and look to set up Wall Street for a weaker end to September and the first monthly decline since March.

Biden’s reference to the number of American deaths from the coronavirus also put the ongoing health risks from the pandemic in stark focus as global infections pass 34 million and more major economies — including now Germany — look to enact targeted restrictions on businesses and travel in order to avoid national lockdowns.

Further downward pressure came from a report that suggested the World Trade Organization will back a European Union request to slap tariffs on $4 billion worth of U.S.-made goods as part of a decades-long spat between Washington and Brussels over state subsidies for planemakers Boeing  (BA) – Get Report and Airbus.

Futures contracts tied to the Dow Jones Industrial Average, which is down 3.44% for the month, are priced for a 165 point decline while those linked to the S&P 500, which has fallen 4.7% through September, are indicating a 19 point pullback. 

Nasdaq Composite futures suggest a 100 point opening bell retreat for the tech-focused benchmark, which is down 6.5% for the month, but still well up for the year with a 29.66% gain. 

European stocks slipped lower in early trading in Frankfurt and London, with investors rattled by Germany’s targeted lockdown plans and GDP data showing a near 20% collapse for the U.K. economy over the second quarter.

The Stoxx 600 benchmark was last seen 0.34% lower, paced by a 0.7% decline for the DAX in Germany, while Britain’s FTSE 100 fell 0.2%.

The U.S. dollar index bounced 0.2% higher against a basket of six global currencies to 94.134 as safe-haven assets such as the yen advanced following President Trump’s election comments, while benchmark 10-year Treasury note yields were modestly lower at 0.65%.

Oil prices continued there downturn, as well, as the stronger dollar offset data from the American Petroleum Institute last night that showed a surprise decline in domestic crude inventories of 831,000 barrels. The Energy Department will publish official figures at 10:30 am Eastern time today.

WTI contracts for October delivery, the U.S. benchmark, traded 44 cents lower from their Monday close in New York to change hands at $38.85 per barrel while Brent contracts for November, the global benchmark, were seen 58 cents lower at $40.45 per barrel.

Overnight in Asia, the yen’s gains in foreign exchange markets hammered the export-focused Nikkei 225, which closed 1.5% lower at 23,185.12 points, while the MSCI ex-Japan benchmark ended the session little changed following a cautious session fore regional stocks.