Asian markets mostly up but traders on edge
Most Asian markets extended gains on hopes Hillary Clinton will beat Donald Trump to win Tuesday’s presidential election but traders are cautious with many opinion polls saying the race is too close to call.
Global equities and risk assets surged Monday after the FBI said it would not pursue criminal charges against Clinton over her use of a private email server while secretary of state.
The rally came after a week of turmoil caused by the bureau’s announcement on October 28 it was looking into the issue, despite having cleared her once already in July.
Clinton is considered by many investors to be a safer bet than Trump, who is seen as a loose cannon with policies many fear could wreck the world’s top economy.
Hong Kong was up 0.5 percent while Sydney, Seoul and Singapore were flat. Shanghai added 0.3 percent ahead of the release later in the day of Chinese trade data. Tokyo ended the morning down 0.2 percent.
“We’ve been swung this way and that over who may win, but expectations of a Clinton victory are firming,” said Toshihiko Matsuno, a senior strategist at SMBC Friend Securities Co.
“Since it’s easier to predict policy with her, there’s more of a sense of security in the market. Stocks may price in 70 to 80 percent (chance) of a Clinton victory today,” he told Bloomberg News.
– Warning –
The gains follow big gains in New York where the S&P 500 ended a nine-day losing streak to rise 2.2 percent, its biggest gain since March. The Dow and Nasdaq each finished more than two percent higher. Frankfurt, London and Paris soared close to two percent.
Also, the Vix volatility index, a benchmark for investor fear, declined after nine straight days of gains.
The Mexican peso was also enjoying continued buying interest, recovering the losses suffered last week. The unit is considered a reflection of Trump’s chances because of his anti-Mexican rhetoric — including his pledge to remove undocumented immigrants, build a border wall and tear up a trade deal.
In early Asian trade, the dollar bought 18.5715 pesos from 18.6463 pesos in New York and well down from the levels approaching 20 pesos touched last week.
The upbeat mood also lifted high-yielding, or riskier, currencies in Asia, with Australia’s dollar, the South Korean won, Thai baht and Malaysian ringgit all up against the greenback.
However, there remains unease with Trump having rallied from a double-digit deficit in some polls to within striking distance of Clinton.
And Imre Speizer, a market strategist at Westpac Banking Corp. in Wellington, warned: “A Trump win would cause a major reversal of the recent moves, so markets will be mostly preoccupied by the election during the day ahead.”
– Key figures around 0230 GMT –
Tokyo – Nikkei 225: DOWN 0.2 percent at 17,150.84 (break)
Hong Kong – Hang Seng: UP 0.5 percent at 22,918.23
Shanghai – Composite: UP 0.3 percent at 3,141.62
Pound/dollar: DOWN at $1.2396 from $1.2397 Friday
Dollar/Mexican peso: DOWN at 18.5715 pesos from 18.6463 pesos
Euro/pound: UP at 89.07 pence from 89.05 pence
Euro/dollar: UP at $1.1042 from $1.1040
Dollar/yen: DOWN at 104.50 yen from 104.53 yen
Oil – West Texas Intermediate: DOWN 11 cents at $44.78 per barrel
Oil – Brent North Sea: FLAT at $46.15
New York – Dow: UP 2.1 percent at 18,259.60 (close)
London – FTSE 100: UP 1.7 percent at 6,806.90 (close)