Asia: Shares rise amid US election, market data
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ASIAN equities climbed as traders prepared for the US election and key economic data that will set the stage for the next Federal Reserve decision.
Shares gained in Hong Kong, Tokyo and Australia while equities in China fluctuated. US futures edged lower after most major groups in the S&P 500 gained at the start of the busiest week for corporate earnings. Treasury yields slipped.
Markets are bracing for the potential prospect of Donald Trump returning to the White House, with most major polls showing him locked in a tight race with Vice-President Kamala Harris.
Crypto companies surged, and Bitcoin rose past US$70,000 for the first time since June, as the former president is seen as supportive of the digital tokens.
A victory for Trump would be more beneficial for stocks and Bitcoin relative to his Democratic opponent, while a Harris presidency would bring slightly more relief to housing costs, according to a Bloomberg Markets Live Pulse survey.
Some 38 per cent of respondents see equities accelerating a year from now under the Republican candidate, versus 13 per cent under the Democrat.
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Trump’s chances of a victory are increasing and “that’s seen as good for US stocks in the short run,” said Phillip Wool, head of portfolio management at Rayliant Global Advisors. “Deficits will increase, inflation will come back, and it could slow Fed rate cuts. All of this would put upward pressure on the dollar, which would be a headwind to other economies across Asia.”
It’s shaping up to be a busy week for investors as the countdown to the US election begins, with corporate earnings and economic data also expected to help dictate the market’s near-term direction.
Just days before the Federal Reserve gathers to reflect on the appropriate tempo of rate cuts, data is set to show underlying resilience in the US economy and a temporary hiccup in jobs growth.
Investors are awaiting results from firms accounting for nearly 42 per cent of the S&P 500’s market capitalization, including several big techs like Apple, Microsoft and Meta Platforms.
“Near-term focus is shifting to megacap earnings that kick off today with Google (Alphabet),” said Charu Chanana, chief investment strategist at Saxo Markets. “There is still an expectation that AI spending will be maintained and that could continue to be a significant driver of broader equity momentum.”
In currency markets, the yen strengthened after Japanese Prime Minister Shigeru Ishiba promised to restore political stability in a bid to maintain power, following his ruling coalition’s failure to win a majority in the lower house.
Traders are also awaiting a BOJ policy decision which is due later this week. Data showed that Japan’s labor market tightened in September, indicating sustained pressure on companies to raise wages ahead of the BOJ meeting.
A gauge of the dollar was steady while 10-year Treasury yields dropped after rising the previous session amid weak demand for a pair of note auctions.
Meanwhile, the Biden administration finalised restrictions on investments by US individuals and companies into advanced technology in China, including semiconductors, quantum computing and artificial intelligence.
Separately, data showed investors yanked money out of exchange-traded funds that buy Chinese stocks last week, halting a streak of inflows as the latest stimulus measures failed to impress investors.
In corporate news, shares of Nippon Paint Holdings jumped as much as 24 per cent, the biggest intraday gain in 24 years, in early Tokyo trading. The Japanese company had announced plans to purchase global chemicals formulator AOC for US$2.3 billion.
HSBC is set to announce third-quarter earnings on Tuesday, with attention expected to focus on what the bank says about its latest restructuring.
In addition, traders will be looking for a steer on Adani Enterprises’ fund raising plans and performance of its coal trading and airports units when the flagship of the Adani Group reports its quarterly earnings.
In commodities, oil inched higher after tumbling about 6 per cent on Monday, as the market focused on the prospect for easing hostilities in the Middle East and upcoming US economic data. Gold advanced toward a record. BLOOMBERG
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