Political risk weighs on equity markets
Wall Street had a choppy session, buffeted by headlines from the stimulus negotiations and the belated realisation of fears any package would stall in the Senate. Although Tesla (NASDAQ:TSLA) provided another set of impressive quarterly results, it was not enough to withstand the political risk, and Wall Street’s indices all finished slightly lower. The S&P 500 fell 0.23%, the Nasdaq fell 0.28%, and the Dow Jones fell 0.35%.
US index futures slumped again this morning after US officials suggested that Russia and Iran are interfering with the US election process. Even the news that Ant Financials’ dual-listing IPO has received final clearance from Chinese authorities could not overcome regional concerns about the US elections. The last US presidential debate, which screens tomorrow at 0900 SGT, may also be prompting Asian investors to take some risk off the table.
The Nikkei 225 has fallen 0.75% after the yen rallied vigorously overnight. The Kospi is also 0.75% lower. The Shanghai Composite and CSI 300 are both 0.90% lower after the PBOC fixed the CNY at a near 2.5-year high this morning. Hong Kong and Taiwan have fallen 0.30%, with Singapore 0.20% lower. Australia’s ASX 200 and All Ordinaries have followed Wall Street down, falling 0.60% today despite firm commodity prices.
The mood in Asia today appears to be one of caution ahead of the final presidential debate tomorrow, and a lack of progress from the US stimulus negotiations. That said, we have probably seen the worst of the days fall. Asia has aligned itself with the falls on Wall Street and will now likely adopt a wait and see posture for the remainder of the session, wary of unpredictable headline risk.
European stock markets look set for another torrid opening. The negative tone from Wall Street and Asia is complicated by a rapidly deteriorating Covid-19 situation across the continent. Its implications for the domestic consumption picture, and the threat to Europe’s recovery, are strong negatives. A breakthrough in Brexit talks will only offer temporary respite.