Five Things You Need to Know to Start Your Day

(Bloomberg) --

Midterm campaign comes down to the wire, China stands its ground in the trade war, and Iran sanctions kick in. Here are some of the things people in markets are talking about today.

Split decision?

With the most expensive midterm campaign in U.S. history coming to a close, both sides are braced for the possibility of a split Congress where Democrats gain control of the House while Republicans retain the Senate. Turnout is surging, with both sides saying they stand to benefit, as voters appear more motivated than usual. The changing demographics of the United States may also play a part in the outcome. President Donald Trump will remain on the campaign trail until tonight. 

Not backing down

Chinese President Xi Jinping showed no signs of making any concessions to the U.S. in a highly-anticipated speech at the Shanghai trade fair. While Xi strongly denounced what he called “law of the jungle” trade practices in a thinly veiled attack on Trump's America First policies, he failed to announce any new major policy initiatives. Optimism about a breakthrough on the trade war in the wake of positive comments from Trump is waning with the president's rhetoric now seen as midterm “posturing.”   

Sanctions back

U.S. economic measures against Iran, which were lifted as part of the 2015 nuclear accord, came back into full force at midnight as the White House ramps up pressure on the Islamic Republic over what it says is the country's “malign” behavior in the region. Secretary of State Michael Pompeo is scheduled to name this morning the eight countries granted a temporary waiver that will allow them to continue to import Iranian crude. Traders have largely downplayed the impact of sanctions – a prescient bet. A barrel of West Texas Intermediate for December delivery was trading at $62.88 by 5:40 a.m. Eastern Time, adding to last week's losses. 

Markets mixed

Overnight, the MSCI Asia Pacific Index dropped 1.2 percent while Japan's Topix index closed 1.1 percent lower as hopes for a resolution to the trade war faded. In Europe, the Stoxx 600 Index was 0.1 percent higher at 5:40 a.m. as investors are probably happy to sit on their hands until after the U.S. election. S&P 500 futures were off a couple of points, the 10-year Treasury yield was at 3.203 percent and gold was little changed. 

Coming up…

At 9:45 a.m., Markit publishes its U.S. services and composite purchasing managers indexes for October. At 10:00 a.m., the ISM non-manufacturing index is released. In the euro area, finance ministers meet in Brussels where they are set to discuss Italy's budget in what's becoming a significant standoff over the populist government's spending plans. Ferrari NV and Occidental Petroleum Corp are among companies reporting.

What we've been reading

This is what's caught our eye over the weekend.

• Odd Lots: How the original rogue trader rebuilt his life after destroying a major bank.
• Bond traders prepare for week full of risk by dumping Treasuries. 
• The inside story of how Uber got into business with the Saudi Arabian government.
• Big Short's Eisman is shorting two U.K. banks.
• How much have ICOs raised in 2018? Depends on who you ask.
• The irresistible urge to build cities from scratch. 
• Cheesy music. 

To contact the editor responsible for this story: Cecile Gutscher at cgutscher@bloomberg.net, Sid Verma

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