HONG KONG – Asian markets were mixed on Tuesday following an upbeat session on Wall Street, as investors looked towards crucial US midterm elections that surveys show could upend power in Washington.
Shares fell in Hong Kong and Shanghai as speculation about a possible rollback of China’s strict zero-Covid-19 policies fuelled volatility, even after the government vowed to stick to its harsh lockdowns and testing regimes.
But Tokyo stocks gained 1.3 per cent at the break, extending rallies in New York, where stocks ended higher and the United States dollar retreated against both the sterling pound and the euro.
Early voting has begun in many states and most US voters go to the polls on Tuesday, with a Republican takeover of Congress likely dooming President Joe Biden’s ambitious proposals.
Polls show that Republicans are likely to win at least one House of Congress – and some see the prospect of further Washington gridlock as a scenario that could lessen the risk of policy uncertainty.
“This may very well be taken as a positive for equity markets over the coming days,” Mr Clifford Bennett, chief economist at ACY Securities, said in a note.
“The Biden administration, while welcomed to office by financial markets, has nonetheless delivered on being a very big spending government,” Mr Bennett said. “It is difficult to argue the extreme inflation and slowing economy are entirely the Biden administration’s fault, but voters will be very clear in their feelings on the matter just the same.”
On Monday, US stocks climbed, with the Dow Jones Industrial Average finishing up 1.3 per cent and the broad-based S&P 500 rising 1 per cent.
The next major data point that investors are watching is US inflation data, due on Thursday.
Seoul gained 0.8 per cent, Taipei jumped 1 per cent and Sydney was up 0.3 per cent in morning trade, with Singapore also rising 0.2 per cent.
But Hong Kong was down 0.6 per cent after jumping nearly 3 per cent in the previous session, as investors continued to hope for a relaxation of China’s strict Covid-19 rules.
“Speculation about reopening continues to add some market volatility,” Mr Taylor Nugent, an economist at National Australia Bank, said in a commentary.
“In a timely reminder of the potential for Covid-19 policy to hit output, Apple warned that iPhone shipments will be lower than previously expected after China lockdowns affected operations at a supplier’s factory,” he noted.
Shanghai was down 0.6 per cent, while Jakarta fell 0.3 per cent, Bangkok retreated 0.2 per cent and Wellington dropped 0.7 per cent. AFP
