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ASIA-MARKETS-UPDATE
Asian markets swing as traders contemplate split US Congress
HONG KONG, Nov 7, 2018 (BSS/AFP) – Asian markets fluctuated Wednesday
after US midterm elections left the two houses of Congress split between
Democrats and Republicans, paving the way for gridlock on Capitol Hill.
Donald Trump’s Republican party maintained its control of the Senate but
the Democrats regained power in the House of Representatives, in line with
forecasts.
But, while the vote saw Trump’s party lose overall power on Capitol Hill,
analysts pointed out that the result is unlikely to lead to a reversal of the
White House’s popular tax cuts and deregulation.
Nor will it wind in the president’s aggressive efforts to reframe
international trade, which has been a key to recent volatility in global
markets.
“Equities remain supported, suggesting this outcome is positive for risk
since the gridlock outcome ultimately will support the president’s mandate
and a higher probability of more fiscal stimulus,” said Stephen Innes, head
of Asia-Pacific trading at OANDA.
“Realistically I can’t see how the Democrats would want to be perceived as
killjoys and try to stifle any policy which is supporting the economy,” he
added.
However, with control of the House, Democrats will likely look to prevent
Trump pushing through his most divisive measures — gumming up the
legislative process — while also looking to boost oversight of the White
House.
Hong Kong lost its earlier gains to sit barely moved in late afternoon
trade, while Shanghai ended 0.7 percent down and Tokyo shed 0.3 percent.
Sydney added 0.4 percent, with Singapore 0.3 percent up. There were also
gains in Taipei and Wellington but Seoul lost 0.5 percent while Manila,
Bangkok and Jakarta were also down.
On currency markets the dollar dipped against its major peers as well as
higher-yielding and emerging market units, as a win for Republicans in both
houses of Congress would likely have led to more tax cuts and regulatory
measures.
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ASIA-MARKETS-UPDATE 2 LAST HONG KONG
– Brexit hopes –
The pound continued to rise as traders grew optimistic that officials are
close to an agreement for a post-Brexit deal for Britain, with the question
of Northern Ireland the main sticking point.
“With the smoke surrounding a possible Brexit deal thickening, the trading
market looks justified in taking the view there must be a fire somewhere,”
said Ray Attrill, head of forex strategy at National Australia Bank.
Energy firms dropped with oil prices on worries about an oversupply
following a forecast-beating rise in US stockpiles, while the head of the
International Energy Agency called on OPEC to boost output.
The comment from director Fatih Birol comes as Venezuela’s production
dries up and US sanctions on Iran kick in.
However, the commodity was already depressed by news that Washington had
given waivers to eight countries allowing them to continue buying crude from
Tehran, tempering most of the embargo’s impact.
“At least three of the top five consumers of Iranian crude have been
granted waivers. Therefore the impact is likely to be substantially muted,”
Sukrit Vijayakar, founder of energy consultancy Trifecta Consultants, told
AFP.
“Apparently, President Trump had a more important short-term goal of
bringing oil prices down so as to help the re-election of Republican
congressmen.”
Both main contracts are down about a fifth from their four-year highs
touched at the start of last month.
– Key figures around 0710 GMT –
Tokyo – Nikkei 225: DOWN 0.3 percent at 22,085.80 (close)
Hong Kong – Hang Seng: FLAT at 26,127.62
Shanghai – Composite: DOWN 0.7 percent at 2,641.34 (close)
Euro/dollar: UP at $1.1435 from $1.1416 at 2120 GMT
Pound/dollar: UP at $1.3110 from $1.3097
Dollar/yen: DOWN at 113.19 yen from 113.46 yen
Oil – West Texas Intermediate: DOWN 49 cents at $61.72 per barrel
Oil – Brent Crude: DOWN 43 cents at $71.70 per barrel
New York – Dow: UP 0.7 percent at 25,635.01 (close)
London – FTSE 100: DOWN 0.9 percent at 7,040.68 (close)
BSS/AFP/HR/1455