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GLOBAL MARKETS-Stocks led higher by tech, bonds rally on election nailbiter

Published 2020-11-03, 11:35 p/m
© Reuters.
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* Asian stock markets: https://tmsnrt.rs/2zpUAr4

* S&P futures whipsawed as U.S. vote proves too close to call

* Tech stocks gain on talk a trump win would favour sector

* Dollar rallies, 10-yr Treasury yields down sharply

* Gold retreats, oil clings to gains

* Graphic: 2020 asset performance http://tmsnrt.rs/2yaDPgn

* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh

By Wayne Cole

SYDNEY, Nov 4 (Reuters) - Share markets veered higher in wild Asian trading on Wednesday as results from the U.S. presidential election proved far closer than polls had predicted, leaving the outcome deeply in doubt.

Investors had initially wagered that a possible Democratic sweep by Joe Biden could ease political risk while promising a huge boost to fiscal stimulus.

But the mood quickly changed on signs President Donald Trump could well snatch Florida and was much closer in other major battleground states than polls had predicted.

U.S. equity futures went on a wild ride, rising then falling, only to climb again as the voting seemed to favour Trump. (For the latest results and news on U.S. election, click: https://www.reuters.com/world/us-election2020 )

Dealers said investors could be thinking a status quo result would at least lessen political uncertainty and remove the risk a Biden administration would roll back corporate tax cuts.

The technology sector seemed encouraged, with NASDAQ futures rising 3.6% NQc1 , while E-Mini futures for the S&P 500 ESc1 swung 1.4% higher. EUROSTOXX 50 futures STXEc1 also turned 0.6% firmer, and FTSE futures FFIc1 gained 0.7%.

Andrew Brenner, head of international fixed income at NatAlliance Securities, said the move in techs looked like it was a play on the Senate potentially staying Republican.

Brenner said that under a Biden win tech stocks were seen faring worse, partly due to Democrats going after the sector in hearings and also that a potential rise in capital gains tax would hit tech stocks harder.

Japan's Nikkei .N225 was ahead by 2%, while MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS edged up 0.1%.

Chinese blue chips .CSI300 rose 0.5%, with markets uncertain how Sino-U.S. relations would develop from here.

Some investors were now hedging against the risk of a contested election or at least a drawn-out process as mail-in ballots were counted.

"It's a wait-and-see," said Matt Sherwood, head of investment strategy at Perpetual in Sydney.

"I think the odds of a clean (Democrat) sweep are diminishing, almost by the minute. That reduces the possibility, or the likelihood at least of a large stimulus program being agreed to in the first days of a Biden administration."

That saw 10-year Treasury yields fall all the way back to 0.83% US10YT=RR , from a five-month top of 0.93%.

The U.S. dollar had a roller coaster session, reversing early losses to be last up 0.9% on a basket of currencies at 93.956 =USD . The euro fell back hard to $1.1644 EUR= and away from a top of $1.1768.

The chance of a Trump victory saw the dollar jump 2% on the Mexican peso MXN= on the assumption U.S. trade policies would continued to favour tariffs.

Going the other way, the dollar eased 0.9% on the Russian rouble RUB= .

STILL TO COME

Investors are still awaiting the outcome of U.S. Federal Reserve and Bank of England meetings this week, which are expected to at least give a nod to further stimulus.

The Reserve Bank of Australia on Tuesday cut interest rates to near zero and boosted its bond-buying program, adding to the tidal wave of cheap money flooding the global financial system. had recently been buoyed by all this liquidity but ran into profit taking on Wednesday, losing 0.6% to $1,896 an ounce.

Oil prices held gains made after industry data showed crude inventories in the United States dropped sharply. O/R

Dealers noted a returned Republican administration would likely be more positive for the oil industry than Democrats that favoured renewable technology.

U.S. crude CLc1 were up 97 cents at $38.63 a barrel, with Brent crude LCOc1 futures gaining 93 cents to $40.64.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Asia stock markets

https://tmsnrt.rs/2zpUAr4 Asia-Pacific valuations

https://tmsnrt.rs/2Dr2BQA Key emerging currencies being split by U.S. election

https://tmsnrt.rs/326Toa7 Global markets since Trump's election

https://tmsnrt.rs/3jNwnis

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