Asian equities traded in a narrow range as traders prepared for the US election and key economic data that will set the stage for the next Federal Reserve decision.
Shares rose in Sydney while Tokyo stocks were little changed and futures pointed to gains in Hong Kong. US futures were steady after most major groups in the S&P 500 gained at the start of the busiest week for corporate earnings.
Markets are bracing for the potential prospect of Donald Trump returning to the White House after his high-profile event in New York on Sunday. Crypto companies surged, with Bitcoin rising past $70,000 for the first time since June in early Asian trading.
A victory for Trump would be more beneficial for stocks and Bitcoin relative to his Democratic opponent, while a Kamala 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.
“Markets have been extremely active over the past month as traders have juiced up the already ebullient scenario baked into equity valuations, adding improved odds of a Republican sweep to the list of goodies discounted,” said Lisa Shalett at Morgan Stanley Wealth Management.
The yen edged higher after Japanese Prime Minister Shigeru Ishiba promised Monday 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 labour 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 slipped.
The S&P 500 rose 0.3% on Monday and the Nasdaq 100 was little changed. The Dow Jones Industrial Average gained 0.6%. The Russell 2000 of small caps climbed 1.6%. In late hours, Ford Motor Co. dropped after trimming its profit forecast.
The Biden administration finalized restrictions on investments by US individuals and companies into advanced technology in China, including semiconductors, quantum computing and artificial intelligence.
Election, Earnings.
In the US, Callie Cox at Ritholtz Wealth Management says pre-election jitters still haven’t shown up in the stock market. The S&P 500 hasn’t had a 1% up or down day this month. If that continues to be the case, it will be the first October without a move that big since 2017, she said. It’d also be the first October of an election year without a 1% move since 1968.
“We’re heading into a busy two weeks,” Cox said. “The election conversation will be the loudest, but the packed slate of earnings and economic data could be what markets care about the most. And the results could be noisy, especially from the jobs side.”
A week before the Fed 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 job growth. Investors are also 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.
“This week’s megacap tech earnings and jobs data will provide plenty of potential fuel for near-term market momentum, but it remains to be seen whether investors will want to sit on their hands until after next week’s election, especially given the volatility around the past two,” said Chris Larkin at E*Trade from Morgan Stanley.
Equities sold off the week before the 2016 and 2020 elections and rallied sharply after them, he noted.
In commodities, oil steadied after tumbling 6% on Monday, as the market focused on developments in the Middle East and upcoming US economic data. Gold edged higher.
Source: https://www.cnbctv18.com/market/asian-shares-fluctuate-with-focus-on-us-election-19500622.htm
