Asian Shares Fluctuate With US Elections in Focus: Markets Wrap

Asian Shares Fluctuate With US Elections in Focus: Markets Wrap · Bloomberg
Aya Wagatsuma
5 min read

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(Bloomberg) -- Asian equities traded in a tight range as investors prepared for the US election and key economic data that will set the stage for the next Federal Reserve decision.

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Shares gained in Tokyo and Australia while equities in China, Hong Kong and South Korea retreated. 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 $71,000 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% of respondents see equities accelerating a year from now under the Republican candidate, versus 13% under the Democrat.

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% of the S&P 500’s market capitalization, including several big techs like Apple Inc., Microsoft Corp. and Meta Platforms Inc.

“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.”

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