US futures and Asian stocks rose Tuesday ahead of the American presidential election, while currency traders braced for increased volatility.
Shares in Hong Kong, Australia and South Korea climbed more than 1%. Japan is closed for a holiday and Treasuries won’t trade until London opens. S&P 500 contracts advanced after the benchmark equity gauge gained Monday following last week’s 5.6% drop. Australian bond yields and the dollar fell after the central bank cut the cash rate and said it planned to buy A$100 billion ($96.03 billion) of five- and 10-year bonds over the next six months.
Implied volatility for the offshore yuan spiked. The one-week tenor -- often used as a proxy of market risk -- has more than doubled in the past week to the highest since Bloomberg began compiling the data in 2011. Overnight gauges for the Australian dollar and sterling also jumped as the presidential vote and its aftermath loom.
“Uncertainty will likely remain until Wednesday morning when we should have clarity on who holds the Presidency and Senate, assuming and this is a big if, the polls are correct,” Sebastien Galy, a senior macro strategist at Nordea Investment Funds SA, wrote in a note.
With the election a day away, polls continue to show Democratic nominee Joe Biden ahead, though battleground states remain tight. Investors are fretting about the possibility the outcome will be contested, which means a clear winner might not emerge for some time, weighing on market sentiment. Also, while there has been a slight slowdown in virus cases in the U.S., several states continue to notch record numbers of infections.
“It’s pretty much a binary outcome,” said Quincy Krosby, chief market strategist at Prudential Financial. “The question is, is the market right now looking at a Biden victory? And will it be disappointed if we don’t have that?”
Once the US election passes, investors will contend with the Federal Reserve delivering a policy decision Thursday before the October jobs report Friday.
Elsewhere, oil was steady after clawing back earlier losses amid signals that Russia, a key OPEC ally, is in talks to possibly postpone the group’s planned output hike in January.
These are some key events coming up:
- Earnings are due from companies including Nintendo Co., Macquarie Group Ltd., Toyota Motor Corp., Alibaba Group Holding Ltd. and AstraZeneca Plc.
- US Presidential election on Tuesday.
- EIA crude oil inventory report on Wednesday.
- Fed policy decision on Thursday.
- The US labour market report is due Friday.
These are some of the main moves in financial markets worldwide:
Stocks
- S&P 500 futures rose 0.5% as of 11:33 a.m. in Hong Kong. The S&P 500 Index climbed 1.2%.
- Australia’s S&P/ASX 200 Index rose 1.9%.
- South Korea’s Kospi index rose 1.7%.
- Hang Seng Index gained 1.9%.
- Shanghai Composite Index gained 1.1%.
- Euro Stoxx 50 Index rose 0.9%.
Currencies
- The yen traded at 104.71 per dollar.
- The offshore yuan was at 6.6907 per dollar.
- The Bloomberg Dollar Spot Index slipped.
- The euro was at US$1.1652 ($1.5918).
- The British pound was little changed at US$1.2926.
Bonds
- The yield on 10-year Treasuries declined three basis points to 0.84% on Monday.
- Australia’s 10-year bond yield fell six basis points to about 0.76%. The three-year yield dropped two basis points to 0.10%.
Commodities
- West Texas Intermediate crude fluctuated and was at US$36.87 a barrel.
- Gold was at US$1,892.25 an ounce, down 0.2%.
