The campaign period for the US presidential race has been a volatile season for financial markets, but Asian markets were more stable on Tuesday only hours ahead of the opening of voting stations in the United States. The quiet trading session in Asia compared to the strong momentum in the country’s stocks a day earlier.
Market experts explained that the calm in Asian stocks as Americans head to voting suggests uncertainty among traders. Although most surveys have shown that Democratic candidate Hillary Clinton is steered to win the election, market players are finding it difficult to count on the predictions of canvassers.
Meanwhile, Britain’s exit from the European Union remains fresh in the minds of several investors and market traders. While the Brexit vote polls implied the Remain camp was preferred to carry the day in the referendum, the actual result surprised everyone. That explains why equity investors are uneasy despite polls showing Clinton on the lead in the US presidential race.
Traders largely favor a Clinton victory in the polls as she is seen to be more predictable, particularly when it comes to economic policies. In contrast, her Republican opponent Donald Trump has fueled fears among several investors with his aggressive policy proposals and though stance on various matters, including the Transatlantic Trade and Investment Partnership.
When the news emerged during the weekend that the Federal Bureau of Investigation would not pursue criminal charges against Clinton over her use of a private email server, global stocks recorded gains. Asia saw a robust stock buying momentum. The trend was repeated in the United States and other global markets as it appeared Clinton had conquered a major hurdle to winning the presidency.
Calm Asian Stock Markets
On the other hand, the concern that pollsters could be wrong in their election forecasts took the pressure out of the markets on the material Election Day, specifically in Asia. Japan’s Nikkei 225 ended the trade lower after climbing 0.3 percent on Tuesday. In Australia, the S&P/ASX 200 struggled to secure a 0.1 percent gain, while South Korea’s KOSPI was able to register a 0.3 percent gain.
A day earlier, the United States recorded some of their biggest gains in the past months. The broader S&P 500 index has added 2.2 percent to hit a new high since March. The blue chip Dow Jones Industrial Average surged 2.1 percent.
Elsewhere, the US dollar tends to be volatile ahead and immediately after the US presidential elections. However, the volatility is projected to be brief if there is continuity in the White House by a Democrat winning the election. In order to cushion traders against heavy losses due to currency volatility, several forex brokers have raised the cost of trading certain currencies, including the Mexican peso, Russian ruble, the British pound and the US dollar.