Asian markets fall as US election jitters

Asian stocks fell on Thursday as uncertainty surrounding the upcoming US elections and rising US Treasury yields dampened investor sentiment. Despite positive earnings reports from Tesla, overall risk appetite remained cautious.

Tokyo’s Nikkei managed to reverse earlier losses and close slightly up by 0.2 per cent. However, the broader MSCI index of Asia-Pacific shares outside Japan fell 0.3 per cent, pressured by declines in Chinese equities.

Hong Kong’s Hang Seng index and China’s blue-chip CSI 300 index suffered losses of 1.3 per cent and 0.8 per cent respectively. Analysts attributed this to profit-taking by investors seeking to hedge short-term risks.

Tesla’s shares surged 12 per cent in after-hours trading after reporting strong third-quarter profits and forecasting 20-30 per cent sales growth next year. This lifted Nasdaq and S&P 500 futures by 0.5 per cent and 0.2 per cent respectively.

The benchmark 10-year Treasury yield increased 16 basis points this week to 4.23 per cent, nearing its three-month high of 4.260 per cent. While US yields remained steady in early Asian trade, regional bonds continued to sell off, pushing Australian 10-year bond futures down to a three-month low.

Stronger yields boosted the US dollar, keeping it close to a three-month high. It gained 1.1 per cent against the yen, breaking the 153 level. Bank of Japan Governor Kazuo Ueda’s comments on inflation targets contributed to the yen’s decline. The euro and Australian dollar also rose to three-month highs against the yen.

The strengthening dollar dampened the recent rally in gold prices. After falling more than one per cent overnight from its record high, gold prices saw a slight recovery on Thursday.

Oil prices also exhibited mixed movement, recouping some losses after a significant build in US crude stocks. Brent futures rose one per cent to settle at $75.72 a barrel.

Attribution: Reuters