ASIAN markets were mixed in early trade on Tuesday (Nov 5) as investors tread cautiously amid heightened volatility in anticipation of the US presidential election.
Market sentiment is likely tempered by uncertainty over potential shifts in US economic policy, trade relations and stimulus measures – all of which could ripple through global financial markets.
Lorraine Tan, director of equity research (Asia) at Morningstar Research, noted that jitters are emerging in the local equities market ahead of the high-stakes election.
The Straits Times Index was down 0.3 per cent or 11.82 points to 3,560.22 in early trade.
Across the region, major indices were mixed, with Hong Kong’s Hang Seng Index declining 0.8 per cent and South Korea’s Kospi falling 0.6 per cent. The Shanghai Stock Exchange Composite Index was down 0.1 per cent in early trade.
Meanwhile, Japan’s Nikkei 225 was up 0.8 per cent, while the FTSE Bursa Malaysia KLCI inched up 0.02 per cent in early trade.
A NEWSLETTER FOR YOU
Friday, 8.30 am
Asean Business
Business insights centering on South-east Asia’s fast-growing economies.
The mixed performance came after Wall Street stocks ended Monday lower and lower-than-expected jobs data was released last week.
The US economy added just 12,000 jobs in October, far below projections – boosting hopes for a Federal Reserve interest rate cut when it gathers later this week.
As investors brace for possible swings, attention remains on sectors and regions most likely to be impacted by the election’s outcome, with volatility expected to persist in the lead-up to results.
For instance, in Singapore, ST Engineering’s share price has fallen from its peak in mid-October at S$4.81, which Tan said could have coincided with media reports that Trump had closed the gap in polls to Kamala.
“ST Engineering is sensitive to high interest rates, and the common view is that a Trump presidency would lead to interest rates staying higher for longer as his inclination to raise tariffs could be inflationary,” she added.
Tan believes investors may prefer to stay on the sidelines amid heightened uncertainties.
Volatility in a neck-and-neck race
In a frantic last push before in-person voting on Tuesday, Kamala has been visiting Michigan – a key battleground state – to rally the public, as well as appearing on television programmes and football games to garner support. Meanwhile, Trump visited Pennsylvania, North Carolina and Georgia.
Polls show the race as neck and neck.
With the race to the White House too close to call, analysts believe that volatility in the Asian markets “should be of no surprise”.
Jason Kuan, director of investment research and advisory at CIMB Singapore, said: “Leading up to when the election results are announced, we should expect more volatility as markets tend not to like uncertainty.”
He noted that while markets may record larger swings post-election, Asian markets are likely to take the lead from the US markets at least in the short term.
A Trump win will likely see equities perform better, while a Harris win will likely see fixed income outperform, led by tariffs and taxes, added Kuan.
But a victory by either is unlikely to change the direction of US policy towards China, said Morningstar’s Tan and senior equity analyst Wang Kai.
“We also anticipate (Trump’s) usual style of bombastic rhetoric could lead to market volatility.
“However, given that China’s equity prices have been beaten down mainly due to domestic economic issues, we also expect some divergence in performance should China’s domestic consumption recover as the government adds stimulus,” they said.
Impact on oil
Oil prices rose almost 3 per cent after Opec+ (Organization of the Petroleum Exporting Countries Plus) said it would extend its supply cuts for another month in December. They had been delaying output hikes on worries about slowing demand in China and the US.
Adding to the oil rally, the US dollar softened with recent polls suggesting Kamala “might be gaining an edge”, said Stephen Innes, managing partner at SPI Asset Management.
“A weaker greenback typically fires up Asia’s demand for oil, and the prospect of a Harris upset has only added fuel to crude’s recent climb,” he added.
