Stocks gain, dollar drops as split congress looms

Stocks in Asia advanced with US stock futures and the dollar fell as the American election results started to coalesce toward the widely predicted outcome of a split Congress. Treasury yields declined.

With closely watched forecasting sites now predicting Democrats on course to win the House of Representatives and Republicans having virtually clinched control of the Senate, contracts on the S&P 500 Index trimmed an advance to a slight gain. The 10-year Treasury yield fell below 3.2%. Stocks in Tokyo and Hong Kong advanced. The results dim chances for any major fiscal initiative from President Donald Trump’s administration, while leaving the White House with the upper hand on getting key appointments approved in the Senate.

Key news

Media including NBC and Fox News reported that the Democrats will take over the House. Senate results showed that the Republicans will keep their majority in the upper chamber. Investors have homed in on six key equity sectors with strong ties to the outcome, including health-care and financial firms. Here’s a sampling of strategists’ views on what the election could bring. The Federal Reserve’s policy decision Thursday looms, along with ongoing tension over trade and the state of the global economy.

Comments

“These midterms were never really expected to be a remarkable market event — if they go to plan that is — but a shock on either side could spring forex markets out of this November slumber,” Stephen Innes, Singapore-based head of Asia Pacific trading with Oanda, wrote in a note.

Moves

E-minis on the S&P 500 were up 0.2% as of 11:09 p.m. in New York. The Bloomberg Dollar Index fell 0.3% and the yen rose to 113.28 per dollar. Tokyo’s Topix Index rose 0.4% as of 1:10 p.m. in Tokyo. Hong Kong’s Hang Seng Index gained 1.2%. South Korea’s Kospi Index rose 0.4%. The 10-year Treasury yield fell four basis points to 3.19%.

More moves

The offshore was little changed at 6.92 per dollar. The euro bought $1.1462, up 0.3%. Oil fell 0.5% to $61.90 a barrel.

Upcoming

China trade data comes Thursday, with gauges of consumer and factory prices expected on Friday. Federal Reserve policy makers are expected to leave the main interest rate unchanged Thursday at their penultimate gathering of 2018. India is closed for a holiday.

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Source: moneyweb.co.za