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Stocks hold tight ranges as US election caution sets in
[TOKYO] Global stocks barely budged on Friday as investors tightened positions with less than two weeks to go before the US presidential election and awaited a breakthrough in stimulus talks in Washington.
The final debate between US President Donald Trump and his Democrat challenger Joe Biden on Thursday presented few surprises for election watchers, but slightly reinforced investor caution heading into the Nov 3 poll.
US S&P 500 futures had dipped slightly after the debate but were mostly flat by midday trade. The underlying index had gained about 0.5 per cent in the previous day on hopes that the US Congress and the White House could soon strike a deal on another round of Covid-19 stimulus.
Shares in Asia hardly budged, with MSCI's broadest index of Asia-Pacific shares outside Japan flat while Japan's Nikkei ticked up 0.2 per cent.
The CSI300 index of mainland China also edged up 0.2 per cent.
At Thursday's debate, Mr Biden renewed his criticism of Mr Trump's handling of the coronavirus pandemic as Mr Trump levelled unfounded corruption accusations at Mr Biden and his family.
"I don't think there's anything new in it, I think that's why the market is not moving much. The focus is still on the timing of the fiscal stimulus and how big it is," said Sim Moh Siong, FX analyst at Bank of Singapore.
On Thursday, US House of Representatives Speaker Nancy Pelosi reported progress in talks with the Trump administration for another round of financial aid, saying legislation could be hammered out "pretty soon".
While the news helped to lift US share prices, the US S&P500 is still down 0.9 per cent so far this week, amid uncertainties over stimulus and the election.
A widening lead in polls by Mr Biden is prompting many investors to bet on a Biden presidency and also a "blue sweep", where Democrats win the both chambers of Congress.
"A blue wave may lead to concerns about the impact on the tech sector, while a Biden win and a split Congress may imply another four years of limited policy changes and politicking," said Mary Nicola, senior economist at Pinebridge Investments in Singapore.
Reflecting concerns Democrats could take a harder stance on big tech firms, the Nasdaq index, which had led the market's rally, has underperformed lately, having lost 1.4 per cent so far this week.
Expectations of bigger government stimulus have also boosted US borrowing costs.
The 10-year US Treasuries yield rose to 4 1/2-month high of 0.87 per cent on Thursday and last stood at 0.853 per cent.
US economic data published on Thursday surprised to the upside, as jobless claims fell more than expected and existing home sales exceeded estimates to more than a 14-year high.
In the currency market, the US dollar bounced back from Wednesday's seven-week low but stayed under pressure as investors began to wager on a Biden presidency and big US stimulus.
The euro traded at US$1.1803, down 0.2 per cent and off Wednesday's high of US$1.1805 but still up 0.7 per cent on the week.
The yen changed hands at 104.77 yen per US dollar, stepping back a tad after its biggest gain in nearly two months on Wednesday.
The Chinese yuan stood at 6.6729 per US dollar in offshore trade, off 27-month high of 6.6278 touched on Wednesday.
Oil prices were supported by hopes on US stimulus and the prospect of extended output cuts.
Brent futures ticked up 0.3 per cent to US$42.59 per barrel while US crude futures rose 0.25 per cent to US$40.74 per barrel.