Markets brace for US election showdown in event-packed week

By Rae Wee

SINGAPORE (Reuters) – Financial markets began the week on a cautious note on Monday, with shares in Asia subdued while the dollar eased slightly ahead of a busy week headlined by the U.S. presidential race which is set to come down to the wire.

The week will also provide investors with global monetary policy catalysts with rate decisions from the Federal Reserve, the Bank of England (BoE), the Reserve Bank of Australia (RBA), Riksbank and Norges Bank.

China’s National People’s Congress (NPC) standing committee meets from Nov. 4 to Nov. 8, which will be closely watched for further details of a raft of stimulus measures that were announced recently.

Trading was thinned in Asia on Monday with Japan out for a holiday, but MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.7%, recovering from its fall to a five-week low on Friday.

U.S. stock futures though lost ground, with Nasdaq futures falling 0.11%, while S&P 500 futures eased 0.14%.

The dollar was on the back foot, with the euro last 0.4% higher at $1.0877. The yen jumped 0.7% to 151.88 per dollar.

Dealers said the dip in the dollar might be linked to a well-respected poll that showed Democratic candidate Kamala Harris taking a surprise 3-point lead in Iowa, thanks largely to her popularity with female voters.

Still, Harris and Republican candidate Donald Trump remain virtually tied in opinion polls ahead of Tuesday’s election and the winner might not be known for days after voting ends.

“At the start of last week, we were pricing about a 48% chance of a red sweep… that’s fallen to around 36% this morning according to Polymarket. So, there’s been a significant easing around the probability of a Republican sweep… the Democrats have certainly closed the gap,” said Tony Sycamore, a market analyst at IG.

“As a result of that, you’re seeing some of the dollar ‘Trump trade’ rally start to come out of the market.”

Analysts believe Trump’s policies on immigration, tax cuts and tariffs would put upward pressure on inflation, bond yields and the dollar, while Harris was seen as the continuity candidate.

Cash trading of U.S. Treasuries was closed in Asia due to the Japan holiday, but futures rallied 10 ticks. [US/]

CHINA, RATES FOCUS

Besides the U.S. election, China’s NPC’s standing committee meeting will also be at the top of investors’ radar.

Chinese stocks got off to a positive start on Monday, with the CSI300 blue-chip index gaining 0.2%, while the Shanghai Composite Index ticked up 0.04%.

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