Asia: Markets mostly up but traders on edge

[HONG KONG] 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 on Monday after the FBI said it would not pursue criminal charges against Mrs 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.

Mrs Clinton is considered by many investors to be a safer bet than Mr 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 per cent while Sydney, Seoul and Singapore were flat. Shanghai added 0.3 per cent ahead of the release later in the day of Chinese trade data. Tokyo ended the morning down 0.2 per cent.

"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.

"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 per cent (chance) of a Clinton victory today," he told Bloomberg News.

The gains follow big gains in New York where the S&P 500 ended a nine-day losing streak to rise 2.2 per cent, its biggest gain since March. The Dow and Nasdaq each finished more than two percent higher. Frankfurt, London and Paris soared close to two per cent.

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 Mr 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 Mr Trump having rallied from a double-digit deficit in some polls to within striking distance of Mrs 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."

AFP