Bangkok, Nov 9: Asian shares were mixed on Wednesday as investors awaited the outcome of the US midterm elections and a major inflation update due later in the week.
Tokyo’s Nikkei 225 index slipped 0.2 per cent and the Hang Seng in Hong Kong also shed 0.2 per cent, to 16,517.04.
The Shanghai Composite index edged 0.1 per cent higher to 3,066.99, while the S and P/ASX 200 in Sydney climbed 0.7 per cent to 7,006.70.
The Kospi in Seoul surged 1 per cent to 2,424.02.
All eyes were on the elections, which could determine how much is done in the next several years in Washington, and possibly beyond. Markets tend to abhor uncertainty.
With Americans heading to the polls across the country amid high inflation and worries about a possible recession, analysts say investors appear to be betting that Republicans will gain control of at least one house of Congress.
That combined with a Democratic White House could lead to little getting done in Washington, which may be bad for society but could also keep the status quo on economic policy.
On Wall Street, trading was tentative through the day, and Wall Street’s benchmark index flipped between an even bigger gain and a modest loss during the afternoon.
The S and P 500 rose 0.6 per cent to 3,828.11, while the Dow Jones Industrial Average climbed 1 per cent to 33,160.83 and the Nasdaq composite gained 0.5 per cent, to 10,616.20.
If Republicans do end up wining control of at least the House of Representatives, the ensuing reaction in financial markets could be modest, according to economists at Goldman Sachs.
Stocks have already rallied in anticipation of it, with two straight gains of at least 1 per cent before Election Day. But a surprise win by Democrats could upset the market if it leads investors to expect higher corporate taxes and other policy changes.
But a Republican win could also mean less help from Congress during a possible recession than under a Congress controlled by Democrats. And economists are forecasting a sharp downturn in coming months as interest rate hikes meant to tame inflation put the brakes on business activity and spending.
The important milestone for markets this week than US Election Day may be Thursday’s report on inflation, which will affect the swift interest-rate hikes the Federal Reserve is pushing through to get it under control.
By raising rates, the Fed is intentionally slowing the economy by making it more expensive to borrow money. High rates also tend to drag down prices for stocks and other investments while raising the risk of a recession.
The Fed has already hiked its key overnight rate to a range of 3.75 per cent to 4 per cent, up from virtually zero in March, and more investors are expecting it to top 5 per cent next year.
A softer reading than expected on Thursday could give the Fed leeway to loosen up a bit. Economists expect the report to show a continued, slight moderation from a peak set during the summer. But a worse-than-expected reading could have the opposite effect.
Stocks are also moving on corporate profit reports, as earnings season enters its tail end. Take-Two Interactive sank 13.7 per cent after reporting weaker results for the latest quarter than expected.
Shares of companies entwined with the crypto-currency economy also fell sharply, with Coinbase Global losing 10.8 per cent and Robinhood Markets falling 19 per cent.
They dropped with crypto prices after the world’s biggest crypto exchange by daily volume, Binance, said it intends to buy one of its bigger rivals, FTX.
Binance is making the purchase to help FTX manage a crunch where users have been pulling money out amid fears about its financial strength. It’s the latest crisis of confidence to slam the crypto industry this year, as prices have tumbled in part on worries about higher interest rates.
Bitcoin at one point sank below USD 17,500 before pulling back to USD 18,267, down 12.2 per cent from a day earlier, according to CoinDesk.
In other trading on Wednesday, US benchmark crude oil gave up 19 cents to USD 88.72 per barrel in electronic trading on the New York Mercantile Exchange.
Brent crude, the international pricing standard, lost 9 cents to USD 95.27 per barrel in London.
The dollar slipped to 145.31 Japanese yen from 145.34 yen. The euro rose to USD 1.0082 from USD 1.0074. (AP)
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