By Wayne Cole
SYDNEY An air of anticipation gripped Asian markets on Wednesday as investors wagered the interminable U.S. election would end with a win for Democrat Hillary Clinton, widely considered a safe pair of hands at home and on the world stage.Equities, the dollar and emerging market currencies were the early favorites over low-yielding hedges such as gold, the yen, Swiss franc and sovereign bonds.MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS added 0.4 percent and Australia 0.6 percent. Futures pointed to opening gains for the Nikkei .N225 while E-mini futures for the S&P 500 ESc1 rose 0.4 percent.Graphic of live election results: tmsnrt.rs/2fxyZV0Graphic of live market reaction: tmsnrt.rs/2fXfo0L Betting exchanges and online trading platforms showed Clinton held a higher probability of becoming the 45th President than Republican Donald Trump, with many giving her a better than 75 percent chance of victory.Clinton led 44 percent to 39 percent in the last Reuters/Ipsos national tracking poll before Election Day.Dealers also cited projections from data firm VoteCastr favoring Clinton in a number of key battleground states, which moved a cluster of currencies.
The Mexican peso and Canadian dollar have become touchstones for market sentiment on the election as Trump's trade policies are seen as damaging to their export-heavy economies.Mexico's peso MXN=D2 hit its highest in two months while the Canadian currency CAD= notched a two-week peak.The U.S. dollar got a lift from expectations the economic continuity implied by Clinton's policies would make it easier for the Federal Reserve to hike interest rates in December after a year of inaction."In contrast, a Trump victory would trigger massive uncertainty that would likely undermine risk assets at least initially, which in turn could preclude a Fed rate hike this year," warned Michelle Girard, chief U.S. economist at RBS.
DOLLAR IN DEMAND
For now, the dollar was firm at 105.15 yen JPY= and eyeing the recent three-month top around 105.53. The euro EUR= eased back to $1.1009, the lowest in a week.Against a basket of currencies, the dollar was up 0.2 percent at 97.935 .DXY.Wall Street had added somewhat to Monday's stellar gains with the Dow .DJI ending up 0.4 percent. The S&P 500 .SPX gained 0.38 percent and the Nasdaq 0.53 percent.
Shane Oliver, head of investment strategy at fund manager AMP Capital, said the most positive outcome for U.S. equities would be a Clinton win with a split Congress."Historically, since 1927 U.S. total share returns have been strongest at an average 16.7 percent per year when there has been a Democrat president and Republican control of the House, the Senate or both."The return only averaged 8.9 percent when the Republican's controlled the presidency and Congress.In commodity markets, a rising dollar pressured gold down to $1,270.76 an ounce XAU=, after suffering its biggest daily loss in a month on Monday. In contrast, bulk commodities extended their bull run with iron ore, coal and copper benefiting mightily from Chinese demand. Hard coking coal has trebled in price since August.Oil took a knock from data showing a surprisingly large rise in crude stocks. Brent LCOc1 was off 33 cents at $45.82 a barrel, while U.S. crude CLc1 eased 9 cents to $44.89. (Reporting by Wayne Cole; Editing by Eric Meijer)
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Published Date: Nov 09, 2016 05:30 AM | Updated Date: Nov 09, 2016 05:30 AM