Asian stocks dip as U.S. political concerns grow

File Photo. An investor looks an electronic board at the stock exchange in Shanghai. Photo courtesy: Reuters

SYDNEY/NEW YORK (Reuters) – Asian stocks slipped on Tuesday as investors adjusted risk exposure heading into the U.S. election and as a deadline for Washington to pass an economic stimulus bill approached while Europe reported record daily coronavirus infections.
MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.11 percent lower after U.S. stocks ended the previous session in the red. Australian and Japanese markets also dipped and MSCI’s gauge of stocks across the globe was 0.09 percent lower.
Chris Weston, the head of research at Melbourne brokerage Pepperstone, said while there were worries about the U.S. stimulus package, recent declines were likely due to positioning ahead of the Nov. 3 presidential election.
“Do you really want to hold those exposures into what could be a volatility event?” Weston said. “We’re getting into the Wild West territory where it becomes more whippy.” Caution among investors globally was also driven by rising concerns about the risk of a disputed U.S. election outcome. “Such an event would very likely upset global markets considerably until the U.S. reaches an accepted resolution,” said American Century co-CIO Keith Creveling.
Japan’s Nikkei slipped 0.34 percent. Hong Kong’s Hang Seng index bucked the trend to rise 0.16 percent. Investors await key earnings results later in the week for companies including Netflix Inc and Tesla Inc. They were also waiting to see if the final debate between U.S. President Donald Trump and his Democratic challenger Joe Biden on Thursday shifts the trajectory of the election.The number of new COVID-19 cases in the United States last week rose 13 percent to more than 393,000, approaching levels last seen during a summer peak, according to a Reuters analysis.
European shares closed lower as surging COVID-19 cases raised investor concerns. Parts of the UK were put into lockdown and France imposed curfews. In contrast to equity markets, currency markets were less pessimistic about the prospect of a stimulus breakthrough with the safe-haven dollar edging slightly lower amid expectations that U.S. lawmakers might still agree on a fiscal stimulus package at the 11th hour. Greenback moves, however, were modest with the dollar index 0.015 percent lower on Tuesday.
The dollar rose 0.03 percent against the yen to 105.46 while the euro was up 0.03 percent to $1.1772. The Australian dollar fell 0.2 percent versus the greenback at $0.7045, hurt by expectations that the central bank would soon cut rates and expand its massive bond buying campaign to lower borrowing costs.
In oil markets, U.S. West Texas Intermediate (WTI) crude futures fell 0.3% to $40.69 a barrel while Brent crude futures dipped 0.6 percent to $42.36 a barrel.