Markets on edge as investors wait for US election outcome
Uneasy calm settles over currencies and bonds ahead of US presidential election
05 November 2024 - 08:13
byTom Westbrook
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Singapore — Stock markets moved sideways and an uneasy calm settled over currencies and bonds as investors waited for the US to choose a new leader, with polls showing the contest on a knife edge.
Oil held sharp overnight gains on delays to producers’ plans for increased output, leaving benchmark Brent crude futures at $75.08 a barrel after a 3% rise on Monday.
MSCI’s broadest index of Asia-Pacific shares outside Japan was flat. Tokyo’s Nikkei returned from a holiday and rose 1.3% in morning trade.
S&P 500 futures ticked 0.1% higher.
The dollar, which had eased overnight as traders made final adjustments to positions, bought ¥152.35 and traded at $1.0875 to the euro.
“They’ve priced what they think is price-able and that’s that,” said Westpac strategist Imre Speizer, adding that a clear win for Republican Donald Trump would lift the dollar, while a win for Democrat Kamala Harris would push it a little lower.
Election day ends an acrimonious campaign jolted by assassination attempts on Trump and the withdrawal of President Joe Biden in favour of Harris, with polls showing the candidates virtually tied.
Markets are on edge about how Trump’s protectionist trade policies in particular could stoke inflation and hit exports in the world’s biggest consumer market with bonds and the dollar expected to move on the outcome of the election.
“Ultimately the US election comes down to this — whether the US electorate wants to vote for economic policy continuity, institutional stability and liberal democracy [Harris] or radical trade policy, a further retreat for globalisation and strongman democracy [Trump],” JPMorgan analysts said in a note. “In short, a vote for stability or change.”
Brced
China is seen on the front line of tariff risk and the currency in particular is trading on tenterhooks with implied volatility against the dollar at record highs.
The yuan hovered at 7.1065 to the dollar, while broader foreign exchange markets were steady. The Australian dollar barely reacted after the central bank held rates, as expected, and reiterated they would stay high for some time.
The Australian dollar traded at $0.6588, but was seen as likely to rally if Harris won the presidency.
“Simply, if Harris wins, we like selling dollar-yen and buying [Australian dollars],” said currency strategists at Citi. “If Trump wins, we like buying [dollars] against [euros], [Swedish kronor], and [Norwegian kroner].”
Treasury markets, which have also priced in a US interest rate cut for Thursday, held their ground in Asia with 10-year US yields at 4.30%.
Bitcoin, which is seen as a beneficiary of a softer regulatory environment should Trump win office, has sold from recent highs and was steady at $67,924 on Tuesday.
When results roll in after midnight GMT the focus will be on battleground states of Georgia, North Carolina, Pennsylvania, Michigan, Arizona, Wisconsin and Nevada.
A winner may not be known for days and Trump has signalled that he will attempt to fight any defeat, as he did in 2020.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Markets on edge as investors wait for US election outcome
Uneasy calm settles over currencies and bonds ahead of US presidential election
Singapore — Stock markets moved sideways and an uneasy calm settled over currencies and bonds as investors waited for the US to choose a new leader, with polls showing the contest on a knife edge.
Oil held sharp overnight gains on delays to producers’ plans for increased output, leaving benchmark Brent crude futures at $75.08 a barrel after a 3% rise on Monday.
MSCI’s broadest index of Asia-Pacific shares outside Japan was flat. Tokyo’s Nikkei returned from a holiday and rose 1.3% in morning trade.
S&P 500 futures ticked 0.1% higher.
The dollar, which had eased overnight as traders made final adjustments to positions, bought ¥152.35 and traded at $1.0875 to the euro.
“They’ve priced what they think is price-able and that’s that,” said Westpac strategist Imre Speizer, adding that a clear win for Republican Donald Trump would lift the dollar, while a win for Democrat Kamala Harris would push it a little lower.
Election day ends an acrimonious campaign jolted by assassination attempts on Trump and the withdrawal of President Joe Biden in favour of Harris, with polls showing the candidates virtually tied.
Markets are on edge about how Trump’s protectionist trade policies in particular could stoke inflation and hit exports in the world’s biggest consumer market with bonds and the dollar expected to move on the outcome of the election.
“Ultimately the US election comes down to this — whether the US electorate wants to vote for economic policy continuity, institutional stability and liberal democracy [Harris] or radical trade policy, a further retreat for globalisation and strongman democracy [Trump],” JPMorgan analysts said in a note. “In short, a vote for stability or change.”
Brced
China is seen on the front line of tariff risk and the currency in particular is trading on tenterhooks with implied volatility against the dollar at record highs.
The yuan hovered at 7.1065 to the dollar, while broader foreign exchange markets were steady. The Australian dollar barely reacted after the central bank held rates, as expected, and reiterated they would stay high for some time.
The Australian dollar traded at $0.6588, but was seen as likely to rally if Harris won the presidency.
“Simply, if Harris wins, we like selling dollar-yen and buying [Australian dollars],” said currency strategists at Citi. “If Trump wins, we like buying [dollars] against [euros], [Swedish kronor], and [Norwegian kroner].”
Treasury markets, which have also priced in a US interest rate cut for Thursday, held their ground in Asia with 10-year US yields at 4.30%.
Bitcoin, which is seen as a beneficiary of a softer regulatory environment should Trump win office, has sold from recent highs and was steady at $67,924 on Tuesday.
When results roll in after midnight GMT the focus will be on battleground states of Georgia, North Carolina, Pennsylvania, Michigan, Arizona, Wisconsin and Nevada.
A winner may not be known for days and Trump has signalled that he will attempt to fight any defeat, as he did in 2020.
Reuters
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