Wednesday 7th November: Asian Markets Wait for US Results

Narayan Joshi No Comments

Global Markets:

  • Asian Stock Markets : Nikkei down 0.10%, Shanghai Composite down 0.50%, Hang Seng down 0.38%, ASX up 0.37%
  • Commodities : Gold at $1230.00 (+0.30%), Silver at $14.56 (+0.41%), Brent Oil at $71.96 (-0.24%), WTI Oil at $61.86 (-0.56%)
  • Rates : US 10-year yield at 3.191, UK 10-year yield at 1.539, Germany 10-year yield at 0.426

News & Data:

  • (NZD) Inflation Expectations q/q 2.00% vs 2.00% previous
  • (JPY) Average Cash Earnings y/y 1.10% vs 1.20% expected
  • (NZD) Unemployment Rate 3.90% vs 4.40% expected
  • (NZD) Employment Change q/q 1.10% vs 0.50% expected
  • BoJ's Funo: US election outcome likely within market expectations
  • Democrats capture U.S. House majority in rebuke to Trump
  • Republicans projected to hold control of the Senate

Markets Update:

Asian stock markets are mixed on Wednesday following the positive cues overnight from Wall Street. Wall Street stock futures held earlier gains after Democrats won control of the U.S. House of Representatives, boosting the party's ability to block President Donald Trump's political and economic agenda. The Democrats' House win creates a clear hurdle for Republicans to easily pass legislation through both chambers of Congress, clouding the outlook for some of Trump's key economic proposals.

In Asian trade, major broadcasters projected the Democrats would wrest House control, while the Republicans were seen retaining the Senate. Investor sentiment had been volatile in Asian trade with stocks and the dollar swinging on the Republicans' fluctuating prospects of retaining the House. While a split Congress would put a brake on Trump's agenda, such as tax cuts or deregulation, some investors think the Democrats may agree to more spending.

In Hong Kong, the Hang Seng index traded fractionally lower. The Shanghai composite traded lower by half a percent while the Shenzhen composite was marginally lower. Japanese benchmarks were largely flat. In South Korea, the Kospi traded down 0.5 percent, reversing gains. Australia's ASX 200 rose 0.35 percent, as major banking stocks in the country traded up.

Trump's massive tax cut, enacted in December, and a spending agreement reached in February have helped lift the U.S. economy, but they have also widened U.S. federal budget deficit. As a result, Treasury supply has been growing, pushing U.S. bond yields higher. The election results pushed down the 10-year U.S. Treasuries yield about 2 basis points.

Oil prices were soft after a 2 percent fall the previous day, with U.S. crude futures hitting an eight-month low as Washington granted sanction waivers to top buyers of Iranian oil and as Iran said it has so far been able to sell as much oil as it needs to.

Upcoming Events:

  • 03:00 PM GMT – (CHF) Gov Board Member Zurbrugg Speaks
  • 04:00 PM GMT – (CAD) Ivey PMI
  • 04:30 PM GMT – (USD) Crude Oil Inventories
  • 09:00 PM GMT – (NZD) Official Cash Rate
  • 09:00 PM GMT – (NZD) RBNZ Monetary Policy Statement
  • 09:00 PM GMT – (NZD) RBNZ Rate Statement
  • 10:00 PM GMT – (NZD) RBNZ Press Conference
  • &more…