Asian stocks pop after US markets cheer midterm elections

Asian stocks were higher in the afternoon after a stateside rally saw the Dow Jones Industrial Average and S&P 500 record their best post-midterm elections rally since 1982.

The Greater China markets advanced during the morning session, with Hong Kong’s Hang Seng index seeing gains of 0.96 percent while the Shanghai composite rose 0.61 percent and the Shenzhen composite tacked on 0.6 percent.

The moves came after China’s October data on both imports and exports smashed analyst expectations.

Exports denominated in dollars rose 15.6 percent from a year ago in October, exceeding an expected 11 percent growth economists polled by Reuters had forecast. Dollar-denominated imports, meanwhile, rose 21.4 percent from a year ago, topping an expected 14 percent.

The country’s General Administration of Customs said the overall trade surplus was $34.01 billion for October, lower than the $35 billion economists had expected.

China’s markets are being closely watched by investors following the U.S. midterm election results — even though experts predicted the outcome would have little impact on the two countries’ ongoing trade war.

Looking to other major Asian markets, Japan’s Nikkei 225 jumped 1.96 percent in afternoon trade and the Topix index saw gains of 1.87 percent. South Korea’s Kospi advanced by 1.35 percent.

In Australia, the ASX 200 was 0.43 percent higher in the afternoon, with most sectors seeing gains as energy stocks advanced 0.62 percent.

Shares of the largest gas pipeline company Down Under, APA Group, bucked the overall positive trend and fell 8.73 percent after the country’s treasurer, Josh Frydenberg, announced his intention on Wednesday to block a takeover bid from Hong Kong’s CK Infrastructure.

Frydenberg said in a media release on Wednesday that he had made his decision “on the grounds that it would result in an undue concentration of foreign ownership by a single company group in our most significant gas transmission business.”

Despite the setback, shares of CK Infrastructure saw slight gains by the end of the morning session in Hong Kong.

Wall Street sees gains post-midterms

Overnight on Wall Street, the Dow Jones Industrial Average jumped more than 545 points to close at 26,180.30 while the S&P 500 gained around 2.12 percent to finish the trading day at 2,813.89. The Nasdaq Composite also advanced 2.64 percent at about 7,570.75.

The major averages had earlier hit their session highs after U.S. President Donald Trump indicated he is willing to work with Democrats on policy initiatives that would help the economy keep growing.

Democrats won control of the House of Representatives while Republicans retained their hold on the Senate, as the U.S. midterm election’s outcome split Congress.

Investors expect Trump’s pro-business policies to continue, while some expressed optimism about Congress providing a larger check on Trump’s more disruptive market actions. Historically, equity markets see strong returns when Congress is divided.

“With trade tensions to the fore over recent months and risk currencies in the spotlight, the US Mid-Terms were being seen through the prism of whether the outcome might embolden the President to go harder on trade or in effect if the elections would clip his wings,” David de Garis, a director and senior economist at National Australia Bank, said in a morning note.

“With the Democrats gaining control over the House, the latter scenario now might be a little more likely,” de Garis said.

Currencies

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 96.198 after yesterday’s rally from the 95.7 handle.

The Japanese yen was at 113.69 against the dollar after weakening from levels around 113 in the previous session while the Australian dollar traded at $0.7279 following gains from around the $0.722 handle yesterday.

Energy in focus

Oil prices had slipped overnight, but they made a partial recovery in the current session. U.S. crude futures were 0.13 percent higher at $61.75 per barrel after seeing their lowest closing price since mid-March on Wednesday. The global benchmark Brent crude futures reversed course to see slight gains at $72.10 per barrel.

The moves in the oil markets came on the back of U.S. oil production jumping to a record 11.6 million barrels a day in the previous week — with crude output stateside now surpassing Russia and Saudi Arabia.

Source: CNBC

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