By Gregor Stuart Hunter
SINGAPORE, Nov 3 (Reuters) – Stocks came under renewed pressure in Asian trade on Tuesday and oil prices stabilised after the previous session’s tumble, with investors on edge ahead of the start of voting for the US midterm elections.
MSCI’s broadest index of Asia-Pacific shares outside Japan was down 1.4% at the lowest level since October 23, led by a decline of as much as 4.1% in South Korean shares.
Taiwanese shares fell 3.3%, putting the local benchmark on track to enter a technical correction after extending losses to 13.1% from a record high in early October.
S&P 500 e-mini futures edged lower for a fourth consecutive day, off 0.1%, while Japanese markets were closed for a holiday.
“Within Asia, Korea and Taiwan equity outflows continue to dominate, given rising concerns around sustainability of the tech cycle,” Bank of America analysts wrote in a note.
Australian shares bucked the trend, rising 0.3%, and the Aussie dollar slipped 0.3% to $0.6978 after the Reserve Bank of Australia lifted its cash rate target by 25 basis points to a near two-decade high of 4.85%, in a split 6-3 vote.
“We believe that the Bank is now done tightening,” Capital Economics analysts wrote in a note. “The RBA lifted its policy rate to an 18-year high today, but noted that monetary conditions are now restrictive. Accordingly, we expect the Bank’s next move to be a rate cut.”
In early European trades, pan-region futures fell 0.9%, German DAX futures slid 0.8% and FTSE futures were 0.2% lower.
Overnight, stocks on Wall Street edged lower, with the S&P 500 slipping 0.5% as tech sector earnings weighed on investor confidence, even as data showed US manufacturing activity picked up in October amid strong domestic demand.
Apple shares extended losses, falling 2.8% in after-hours trading after the iPhone maker on Monday forecast lower gross margins for the crucial holiday quarter, citing rising memory-chip costs, and projected services revenue growth that fell well short of Wall Street expectations.
Investors are also preparing for voting in the US midterm elections, where President Donald Trump’s Republican Party is facing a challenge to keep its hold on Congress.
“Tuesday will be nothing more than the day ahead of a much bigger day,” ING analysts wrote in a note. By tomorrow, the market will have guidance on the midterm implications and the US Treasury’s quarterly refunding announcement, they wrote.
The yield on the US 10-year Treasury bond was up 2.1 basis points at 4.913%.
Opinion polls favour the Democrats to win the House, though the Senate remains too close to call. Prediction market sites Polymarket and Kalshi currently assign probabilities of 77% and 76%, respectively, that the Democrats will control the Senate.
“Prediction markets imply the greatest likelihood of a Democratic ‘sweep’, but polling margins remain broadly comparable to Trump 1.0 midterms in 2018 when Democrats won the House decisively, but Republicans held onto the Senate,” MUFG analysts wrote in a note.
“Brazil’s election surprise is a reminder that prediction markets can misprice political tail risks, raising questions around the roughly 70% odds now assigned to a blue ‘sweep’ in the midterms.”
CRUDE STABILISES
Oil prices steadied after a fall, with Brent crude up 0.5% at $105.30 in Asian trading as investors weighed the state of peace talks between the US and Iran. The US carried out strikes on Iran’s Qeshm Island in the Strait of Hormuz, a US official told Reuters on Monday, confirming an earlier Wall Street Journal report.
Crude prices fell more than 7% on Monday as talks between Iranian and Qatari officials lifted hopes for an end to the US-Israeli war with Iran and stabilisation of Middle East crude supply.
Against the Chinese yuan, the US dollar was 0.4% stronger at 6.6724 yuan in offshore trade after the People’s Bank of China said on Tuesday it would raise the foreign exchange deposit reserve ratio for financial institutions to 6% from 4% from November 15.
The dollar index, which measures the greenback’s strength against a basket of six currencies, was stable at 101.78, after slipping 0.2% to a one-month low on Monday.
Cryptocurrencies remained choppy after last week’s Binance hack, as customers withdrew a net $4.72 billion of funds. Bitcoin nudged 0.1% higher to $76,822.21 and ether declined 0.2% to $2,250.41.
(Reporting by Gregor Stuart Hunter; Editing by Muralikumar Anantharaman and Jamie Freed)
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