Asian shares dip as worries over US outcomes rise

Sydney/New York — Asian stocks slipped on Tuesday as investors adjusted risk exposure heading into the US election and as a deadline for Washington to pass an economic stimulus bill approached, while Europe reported record daily coronavirus infections.

MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.11% lower after US stocks ended the previous session in the red. Australian and Japanese markets also dipped and MSCI’s gauge of stocks across the globe was 0.09% lower.

Chris Weston, the head of research at Melbourne brokerage Pepperstone, said while there were worries about the US stimulus package, it was likely that recent declines were due to positioning ahead of the November 3 presidential election.

“Do you really want to hold those exposures into what could be a volatility event?” Weston said. “We’re getting into the Wild West territory where it becomes more whippy.”

Caution among investors globally was also driven by rising concerns about the risk of a disputed US election outcome.

Such an event is likely to upset global markets until the US reaches an accepted resolution, said American Century CIO Keith Creveling.

Japan’s Nikkei slipped 0.34%. Hong Kong’s Hang Seng index bucked the trend to rise 0.16%.

Investors await earnings results later in the week for companies including Netflix and Tesla. They were also waiting to see if the final debate between US President Donald Trump and his Democratic challenger Joe Biden on Thursday shifts the trajectory of the election.

The number of new Covid-19 cases in the US last week rose 13% to more than 393,000, approaching levels last seen during a summer peak, according to a Reuters analysis.

The Dow Jones Industrial Average fell 1.44%, the S&P 500 was 1.63% lower and the Nasdaq Composite settled down 1.65%.

European shares closed lower as surging Covid-19 cases raised investor concerns. Parts of the UK were put into lockdown and France imposed curfews.

In contrast to equity markets, currency markets were less pessimistic about the prospect of a stimulus breakthrough with the safe-haven dollar edging slightly lower amid expectations that US legislators might still agree on a fiscal stimulus package at the 11th hour.

Greenback moves, however, were modest with the dollar index 0.015% lower on Tuesday. The dollar rose 0.03% against the yen to 105.46, while the euro was up 0.03% to $1.1772.

The Australian dollar fell 0.2% vs the greenback at $0.7045, hurt by expectations that the central bank would soon cut rates and expand its huge bond buying campaign to lower borrowing costs.

In oil markets, US West Texas Intermediate (WTI) crude futures fell 0.3% to $40.69 a barrel, while Brent crude futures dipped 0.6% to $42.36 a barrel.

Reuters