US dollar spooked in Asia as early US polls mixed, too close to call

The US currency is seen in Manassas, Virgina.
The US currency is seen in Manassas, Virgina.PHOTO: AFP

SYDNEY (REUTERS) - Asian markets were on tenterhooks on Wednesday (Nov 9) as early state exit polls in the US presidential election showed wins for both candidates and no clear trend as yet, causing an immediate shift back to safe haven assets.

Equities were still generally firmer, with US stock futures up 0.3 per cent in choppy trade, but the dollar slipped on the yen and euro as investors hedged against the risk of a shock win by Republican Donald Trump.

Markets have tended to favour Democrat Hillary Clinton as a status quo candidate who would be considered a safe pair of hands at home on the world stage.

"In contrast, a Trump victory would trigger massive uncertainty that would likely undermine risk assets at least initially, which in turn could preclude a Fed rate hike this year," warned Michelle Girard, chief U.S. economist at RBS.

Much of the action was in the currency markets where the Mexican peso has become a touchstone for sentiment on the election as Trump's trade policies are seen as damaging to its export-heavy economy.

The dollar rose 0.6 per cent on the peso as the early results were reported, after hitting its lowest in two months overnight.

 

The dollar backtracked 0.3 per cent on the safe haven yen to 104.80 yen, while the euro rose to $1.1031. Against a basket of currencies, the dollar was off 0.1 percent at 97.766.

In share markets, MSCI's broadest index of Asia-Pacific stocks outside Japan was still up 1.2 per cent, while the Nikkei added 0.7 per cent. E-mini futures for the S&P 500 rose 0.1 per cent.

Betting exchanges and online trading platforms had shown Clinton held a higher probability of becoming the 45th President, with many giving her a better than 75 percent chance of victory.

Clinton led 44 per cent to 39 per cent in the last Reuters/Ipsos national tracking poll before Election Day.

Yields on 10-year US Treasury yields held at 1.860 percent, after touching a high of 1.876 per cent.

Wall Street had added somewhat to Monday's stellar gains with the Dow ending up 0.4 per cent. The S&P 500 gained 0.38 per cent and the Nasdaq 0.53 per cent.

 

Shane Oliver, head of investment strategy at fund manager AMP Capital, said the most positive outcome for US equities would be a Clinton win with a split Congress.

"Historically, since 1927 US total share returns have been strongest at an average 16.7 per cent per year when there has been a Democrat president and Republican control of the House, the Senate or both." The return only averaged 8.9 per cent when the Republicans controlled the presidency and Congress.

In commodity markets, gold edged up to US$1,276.40 an ounce .

Oil took a knock from data showing a surprisingly large rise in crude stocks. US crude eased 22 cents to US$44.76, while Brent was untraded early in the Asian day.