With eight days remaining to the US presidential election, global equity markets have kicked off the week on the back foot. Fiscal stimulus had been the dominant topic over the past few days and the chances of passing any kind of package ahead of next week is declining, while coronavirus infections hit records in the US and several European countries.

US political drama will continue to be the major market moving factor for the upcoming week and probably beyond. So far betting odds continue to show Biden in the lead with a 66% chance of winning the election, according to RealClearPolitics. However, chances of a blue wave have dropped to 50% suggesting a more volatile market reaction to the result on 3 November. Markets still seem positioned for a Democratic sweep, given how infrastructure and renewable energy stocks have surged over the past four months relative to sectors dependent on a Republican win such as energy, financial and defense stocks.

Currency traders also share a similar belief, with the Dollar lower against most major peers year-to-date, and expecting the inverse correlation between the Greenback and risk assets to continue to hold over the foreseeable future.

Investors should be prepared for more noise across asset classes as we approach Election Day, especially if Trump manages to tighten the race with a few days remaining.

Away from politics, it is a big week for earnings. Tech giants Apple, Amazon, Alphabet and Facebook are among the 186 companies due to announce third quarter results this week. If positive earnings surprises continue to hold at around 84%, that could provide a further boost to large cap stocks, but if virus infections hit new records this should cap the gains.

Monetary policy meetings are also on the radar of investors this week with the Bank of Canada Wednesday, and European Central Bank and Bank of Japan both announcing decisions on Thursday. Deflation has become a major threat in Europe and despite the ECB increasing the size of its Pandemic Emergency Asset Purchase Program (PEPP) to €1.35 trillion from €750 billion, economic activity in the Eurozone appears to stall, according to the latest service PMI’s. The absence of a cohesive fiscal response is making the job harder for the ECB, and while challenges continue to mount from rising Covid infections, a Brexit trade deal and the risk of a double dip recession, the central bank is expected to pave the way for more stimulus. However, this won’t likely come before December.

The Bank of Japan is also expected to keep policy unchanged on Thursday, but the downgrade in economic forecasts will be crucial for the Yen and Japan’s equities.