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Asia: Markets on edge on US election uncertainty

Thursday, November 3, 2016 - 11:09

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[HONG KONG] Asian stocks struggled again on Thursday, with uncertainty over next week's presidential election sending investors rushing for the sidelines, pushing safe havens such as the yen and gold higher.

With just days to go until the November 8 poll, maverick tycoon Donald Trump has closed what was once considered an unassailable lead over market-favourite Hillary Clinton, upending early confidence.

The former secretary of state is considered by most investors to be a safer, more stable bet than Mr Trump, who is seen as a loose cannon.

And while she is still tipped to win, analysts said the late run by Mr Trump has fired uncertainty, sparking a sell-off across the world.

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"The move to take risk off the table continues," Chris Weston, chief market strategist in Melbourne at IG, said in an e-mail to clients.

"We have reached a point where there is a buyers' strike, where money managers have reduced their risk, increased cash allocations within the portfolio and are happy to ride out this mini-storm of uncertainty. This is a perfect breeding ground for short sellers who love the combination of uncertainty and lack of bids."

In early Asian trade, most of the main markets edged up but not enough to rub out Wednesday's plunges.

Shanghai was up 0.2 per cent, Sydney put on 0.1 per cent and Seoul was also 0.2 per cent up but Hong Kong eased 0.1 per cent. Singapore, Wellington and Taipei were all lower. Tokyo is closed for a public holiday.

The rush for safety also saw gold prices climb back above US$1,300 for the first time since the start of October, while the yen was also stronger.

In early Asian trade the dollar bought 103.20 yen, down from 103.42 yen in New York and well off the levels above 105 yen seen at the start of the week.

The greenback got no help from an expected Federal Reserve decision to hold interest rates and flag a possible hike in December.

Fears of a Trump presidency has led to speculation the Fed could hold off a December hike - which has been largely priced into markets - owing to fears about his impact on the economy.

The Mexican peso edged up slightly against the dollar but remained under pressure. The dollar bought 19.29 pesos, against 19.36 pesos in the US but well up from the 18.85 pesos late Tuesday.

The peso has steadily fallen on concerns of a potential victory for Trump, whose anti-Mexican rhetoric has included a pledge to remove undocumented migrants, build a wall along the border and tear up a US trade deal with its neighbour to the south.

Attention now turns to the release Friday of October US jobs data, which will provide a clearer snapshot of the US economy, with analysts saying a strong reading will cement the argument for a rate rise next month.

AFP

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