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Asian Stocks Mixed After Wall Street’s Election Gains

November 6, 2020

Asian stock markets were showing mixed signals at the start of Friday’s session as Wall Street’s markets climbed. With vote-counting from this week’s U.S. elections still yet to be concluded, markets remain unpredictable as ever.

Tokyo and Sydney both showed positive gains, while Shanghai and Hong Kong both declined. Seoul was more volatile, fluctuating between gains and losses.

Markets suggest that investors are gambling on control of the U.S. Congress will be split between Republicans and Democrats, meaning that lower taxes and lighter regulation will continue.

On Wall Street, the S&P 500 index closed 1.9% higher at 3,510.45, moving toward its biggest weekly gain since April. The Dow Jones Industrial Average was up by 1.9% to 28,390.18. The Nasdaq climbed by 2.6% to 11,890.93.

“I find it remarkable how relaxed these markets are under the circumstances,” said Craig Erlam of Oanda. “Hopefully, the faith investors have shown is rewarded, because the last thing we need is an extremely messy conclusion to what has already been a hostile and divisive election.”

The Shanghai Composite Index dropped by 0.5% to 3,302.02 while the Nikkei gained 1.1% to 24,367.35. The Hang Seng fell 0.3% to 25,617.47. The Kospi only fell by less than 0.1% at 2,415.67. The ASX 200 in climbed by 0.9% to 6,193.20.

In the U.S. presidential election, challenger Joe Biden leads in the vote counting, but President Donald Trump and his supporters are questioning the legitimacy of the totals with key states still counting ballots.

“Markets are still betting on a clear election outcome (presumably Biden),” said Mizuho Bank in a report.

Analysts warn that an extended court battle with no clear winner could increase uncertainty and have a negative impact on stock markets.

In addition to this, the U.S. Federal Reserve said its key interest rate will be left at a record low near zero, reaffirming its readiness to do more to support the economy under threat from a worsening coronavirus pandemic.

Technology stocks were largely responsible for the rally. Growing expectations that Republicans will hold onto the Senate have eased investors’ worries that a Democratic-controlled Washington would put pressure on anti-monopoly laws and have a huge impact on Big Tech companies.

Apple climbed by 3.5%, Microsoft by 3.2%, and Amazon was up by 2.5%. Facebook increased 2.5% and Google’s parent company rose 1%. These are the biggest stocks in the S&P 500 by market value.

About 82% of stocks in the S&P 500 closed higher. Qualcomm climbed a massive 12.7%, after strong revenue and profit reports for the latest quarter, much greater than analysts expected.

In energy markets, U.S. crude lost 71 cents to $38.08 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 36 cents on Thursday to $38.79. Brent crude dropped 71 cents to $40.22 per barrel in London. It shed 30 cents the previous session to $40.93.

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