Asian stocks extend pre-US vote slide, pound jumps on Brexit court ruling

A pedestrian looks at an electronic stocks display in the window of a securities company in Tokyo on Nov 1, 2016.
A pedestrian looks at an electronic stocks display in the window of a securities company in Tokyo on Nov 1, 2016.PHOTO: AFP

WELLINGTON (BLOOMBERG) - A global stocks selloff extended into Asian trading on Friday (Nov 4) as crude oil held near a one-month low and investors shunned riskier assets ahead of next week's US presidential election.

The MSCI Asia Pacific Index fell to a seven-week low after an eighth day of losses for the S&P 500 Index, the US benchmark's longest losing streak since 2008.

CNBC noted that if the S&P 500 continues its weak performance and is lower after next Tuesday's close, the day Americans cast their vote, it would be only the third time in 23 presidential elections that the stock market fell in the week before a president was elected. As of Thursday's close, the S&P is down 1.1 per cent loss since Tuesday's closing bell.

The pound traded near a four-week high after the Bank of England said on Thursday it's no longer expecting to cut interest rates this year and a court ruled the UK must hold a vote in Parliament before starting the countdown to Brexit.

Sterling was on track for a 2.3 per cent weekly bounce, its best performance in eight months, after jumping by the most since August on Thursday.

Against the Singapore dollar, the pound was up 0.26 per cent at S$1.7276 at 11:10am on Friday, after rising 1.2 per cent on Thursday to s$1.7230. The pound started the week at S$1.6937.

The yen, gold and sovereign bonds were all headed for their biggest weekly gains since at least July, spurred by demand for safe havens.

The MSCI Asia Pacific Index fell 0.8 per cent as of 11:10am Tokyo time, with all 10 industry groups losing ground. Japan's Topix index sank 1.7 per cent after being shut on Thursday for a holiday.

Hong Kong's Hang Seng Index fell 0.32 per cent while the Shanghai Composite Index shed 0.08 per cent.

Australia's S&P/ASX 200 index skidded 0.7 per cent while Singapore's Straits Times Index was down 0.4 per cent.

Global stocks are at the tail end of their worst week since the run-up to Britain's June vote to leave the European Union, having taking a knock as opinion polls showed a dwindling lead for Democratic presidential candidate Hillary Clinton before America votes on Tuesday. Gauges of expected volatility in equities and currencies have spiked, with Clinton - seen as the more predictable contender among investors - only just ahead of Republican rival Donald Trump in two surveys released Thursday.

"Markets have reacted with cautiousness to political uncertainty," said Jasper Lawler, a London-based analyst at CMC Markets Plc. "Investors are not panicking, but have been paralyzed into inaction."

Futures on the S&P 500 Index rose 0.1 per cent ahead of monthly American payrolls data due Friday that may influence the outlook for interest rates.

US shares fell in the last session as a New York Times/CBS poll found Clinton ahead 45 per cent to Trump's 42 per cent among likely voters, down from a nine-point lead in the same poll in mid-October. A Washington Post/ABC News tracking poll, meanwhile, found Clinton ahead within the margin of error, 47 per cent to 45 per cent, having lost ground to Trump since last week.

The Bloomberg Dollar Spot Index was little changed on the day and set for a 0.8 per cent weekly loss, having retreated as election concerns outweighed a pickup in speculation that the Federal Reserve will raise interest rates next month. The central bank left policy unchanged at a review this week and signaled that a December rate hike was likely. The yen, euro and Swiss franc all strengthened more than 1 per cent this week.

"The dollar is showing clear signs that investors are worried about a Trump win," said Sean Callow, a senior strategist at Westpac Banking Corp. in Sydney.

"The slide in the dollar against ultra-low-yielding currencies such as euro, yen and Swiss franc is evidence of a flight to safety, reversing a period of optimism where the dollar enjoyed the combination of stronger polling results for Clinton and not entirely coincidental positioning for a Fed hike in December."

Crude oil added 0.4 per cent to US$44.82 a barrel in New York. It has plunged 8 per cent this week lost 8 per cent this week, its worst performance since February, as the US reported a record jump in its stockpiles. In addition, members of the Organization of Petroleum Exporting Countries who are claiming exemption from an agreement to limit supplies helped boost the group's output to an all-time high last month.

Gold climbed 2.1 per cent this week, the most since July, and touched US$1,308.02 an ounce on Wednesday, the highest level in about a month. The turmoil triggered by a victory for Trump could send the precious metal to US$1,400, according to Citigroup and UBS Group.

With additional information from the Straits Times