Asian Stocks Trade Cautious As US Election Uncertainty Grips Investors
Amidst the volatility of the US election, traders will also eye the Reserve Bank of Australia's decision regarding its key policy rates.
Stocks in the Asia-Pacific region opened mixed as uncertainty mounted ahead of election day in the US and upcoming Federal Reserve's policy meeting.
Equity benchmarks in South Korea and Australia opened lower while the Japanese stocks were marginally higher. The Nikkei was 137 points, or 0.32%, higher at 38,137, while the Kospi was down 19 points, or 0.76%, at 2,570 as of 5:35 a.m.
Stocks in China closed higher on Monday as the government announced measures to attract foreign investments by allowing them to provide capital for publicly traded firms as strategic investors.
Further, China's Standing Committee of National People’s Congress will meet from Monday to Friday, with investors eyeing further fiscal measures to revive the economy.
Amidst the volatility of the US election, traders will also eye the Reserve Bank of Australia's decision regarding its key policy rates. The Australian central bank is set to keep rates status quo at a 13-year high of 4.35%, according to Bloomberg.
In the run up to Tuesday's election, stocks in the US declined while bonds continuing their rise, as polls indicated a tight context with votes narrowly split between Donald Trump and Kamala Harris. The dollar dropped the most since August.
Later in the week, focus from election results will shift to Jerome Powell as the Federal Reserve will decide on its key interest rate on Thursday, likely influenced by the candidate emerging victorious in the presidential race. While Chair Powell will likely stress that the current conditions warrant less restrictive policy, he still risks political backlash.
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Wall Street closed slightly lower with the dollar dropping the most since August. The S&P 500 and Dow Jones Industrial Average declined 0.28% and 0.61%, respectively, while the Nasdaq Composite slipped 0.33%.
All asset classes in the US were hit by a rare anxiety at this point of the cycle, Bloomberg News reported. A gauge of cross-asset risk kept by Bank of America Corp. jumped to the highest point of any pre-election week outside of the financial crisis.
On the commodity front, crude oil prices were slightly higher after about 3% surge on Monday as tensions rose in West Asia with Iran outlining a possible response to Israel’s recent attack. Brent crude was trading 2.71% higher at $75.08 a barrel as of 6:00 a.m. IST. West Texas Intermediate was down 0.01% at $71.46.
