Stock slump deepens in Asia amid US election angst

Pedestrians walk past an electric quotation board displaying the Nikkei key index of the Tokyo Stock Exchange in Tokyo. PHOTO: AFP

HONG KONG (BLOOMBERG) - Investors are becoming more jittery amid a tightening race for the US presidency, spurring losses in Asian shares, US equity index futures and the Mexican peso n Thursday (Nov 3). The US dollar weakened versus most peers as gold paced gains among haven assets.

With Japan shut for a holiday, a gauge of stocks in the rest of the Asia-Pacific region was near a two-month low as Fox News reported that a Federal Bureau of Investigation probe involving Democratic nominee Hillary Clinton was intensifying.

The peso slid to its weakest level since September on concern Mexico's trade ties with the US will worsen if she loses. Bloomberg's dollar index dropped for a fifth day amid concern the election's fallout could kill off any prospect of the Federal Reserve raising interest rates next month. Gold gained for a sixth day and copper retreated from its highest level since July.

Investors turned more risk averse over the past week as polls suggested Clinton's once dominant lead over Donald Trump was faltering ahead of next week's election, with her prospects having dimmed as the FBI reopened a probe into her use of an unauthorized e-mail server while Secretary of State. Bets on a December interest-rate hike by the Federal Reserve were stepped up on after a policy meeting concluded on Wednesday as the central bank signaled a December move is likely.

"US.political uncertainty ahead of next week's election is weighing on markets," said Elias Haddad, a senior currency strategist at Commonwealth Bank of Australia in Sydney. "Most polls suggest the presidential election is turning out to be a closer call now compared to a few days ago following the controversy about Hillary Clinton's e-mail investigation. In the short term, this should weigh on the dollar particularly versus the yen and euro."

The MSCI Asia Pacific excluding Japan Index fell 0.1 per cent as of 12:25pm in Hong Kong, after a 1.4 per cent drop on Wednesday that marked its steepest slide in a month. New Zealand's benchmark stock gauge entered a correction, while Hong Kong's Hang Seng Index fell to its lowest since August.

Futures on the S&P 500 Index dropped 0.3 per cent following a seventh day of losses in the US benchmark, its longest selloff since November 2011. Nasdaq 100 Index contracts declined 0.5 percent after Facebook Inc slid in extended New York trading after reporting earnings. The social network predicted an uptick in costs and a slowdown in advertising sales growth.

The Bloomberg Dollar Spot Index, which tracks the currency against 10 major peers, fell 0.2 per cent. The yen strengthened as much as 0.7 per cent to a one-month high and South Korea's won rebounded from a three-month low. A JPMorgan Chase & Co index of global currency volatility ended Wednesday at the highest level since Sept. 14.

Mexico's peso fell as much as 0.8 per cent to its weakest level since September, reversing an earlier advance. The currency tends to fall when Trump's prospects election prospects improve because he has pledged to revisit the North American Free Trade Agreement that governs commerce between the US and Mexico.

Gold climbed 0.7 per cent and was set to close above US$1,300 an ounce for the first time in a month. Copper declined 0.3 percent in London and aluminum extended Wednesday's retreat from its highest level since June 2015.

Crude oil was up 0.9 per cent at US$45.73 a barrel after tumbling 2.9 per cent in the last session. US inventories rose by 14.4 million barrels last week, the biggest gain in data going back to 1982 and more than the 2 million barrel increase forecast in a Bloomberg survey, official figures show. Record Opec output last month is also damping the outlook for oil, complicating the group's effort to stabilize prices.

Join ST's Telegram channel and get the latest breaking news delivered to you.