Asian stock markets showed cautious gains on November 5, as investors remained alert ahead of the crucial U.S. presidential election, which could greatly impact the region’s economy. The Tokyo Stock Exchange adjusted its trading hours for the first time in seven decades, with the Nikkei index rising 1.19%. Meanwhile, currency and oil markets reacted to election uncertainties, and slight gains were observed in Chinese markets, all while analysts warned of potential economic shocks from differing U.S. trade policies.
Asian Markets Navigate Cautious Gains
On Tuesday, November 5, Asian stock exchanges displayed a sense of cautious optimism, marked by volatility as investors remained vigilant ahead of the pivotal U.S. presidential election. The outcome of this election is anticipated to have significant implications for the region’s economic landscape.
Tokyo Stock Exchange Adjusts Trading Hours
In Tokyo, the benchmark Nikkei index climbed by 1.19%, reaching 38,505.63 points, while the broader Topix index saw a 0.80% increase to 2,665.20 points. This rise follows a long weekend attributed to a public holiday on Monday. Notably, the Tokyo Stock Exchange has implemented a significant change to its trading schedule for the first time in 70 years, now closing at 15:30 local time (06:30 GMT), which is half an hour later than before. This adjustment aims to attract more foreign investors, as analysts from Tokai Tokyo Securities predict that “this extension of trading hours should lead to an increase in trading volumes.”
As the Japanese market cautiously advances just hours before the American election, traders are bracing for a week filled with corporate earnings reports. Experts from Tokai Tokyo caution that there is a growing sense of paralysis among traders, as the market has already priced in the possibility of a Trump victory. A win for Kamala Harris, his Democratic rival, could lead to market disruptions. Additionally, the composition of the U.S. Congress, which could influence the future president’s agenda, is also under scrutiny.
In the airline sector, both ANA and JAL experienced declines of 1.37% and 1.35%, respectively, following reports of a significant drop in quarterly profits due to increased fuel costs and challenges stemming from Boeing’s issues.
Currency and Oil Markets Respond to Election Uncertainty
In the foreign exchange market, caution is evident as traders adjust their positions in response to favorable polling for Kamala Harris. Previously, many had positioned themselves in anticipation of a Trump victory, which could increase U.S. debt and bond yields. At around 01:45 GMT, the dollar weakened, trading at 152.35 yen and 0.9193 euro.
Oil prices have stabilized following a surge the previous day, influenced by the weakened dollar and geopolitical tensions, particularly threats from Iranian officials against Israel. Furthermore, delays in production increases from the OPEC+ alliance are expected to restrict the supply of crude oil. As of 01:45 GMT, North Sea Brent crude was down 0.11% at $75, while West Texas Intermediate fell 0.13% to $71.38.
Chinese markets also experienced slight gains amid high volatility, as investors awaited a parliamentary session that would finalize the economic stimulus plans announced by Beijing, all while closely monitoring the developments in the U.S. election. By 01:45 GMT, the Shanghai composite index rose 0.34% to 3,321.34 points, and the Shenzhen index increased by 0.82% to 2,000.11 points. In Hong Kong, the Hang Seng index was up 0.27% at 20,622.45 points.
Analysts from MUFG bank emphasize that the two U.S. presidential candidates present vastly different economic and trade policies, noting that a Trump victory could impose significant tariff barriers, posing a considerable shock to Asian economies. They also highlight that China, grappling with a persistent real estate crisis, would face these tariffs from a position of vulnerability.