Asian investors eye US midterms

US_midterm_electionAsian investors have one eye firmly fixed on the US as the electorate prepares to head to the polls for the midterm elections on November 6, 2018. Stocks in Asia were mixed ahead of the vote, with Greater China territories in the red at the end of the morning session. The Shanghai Composite was down by 1.05% while the Shenzhen composite tumbled by 1.611%. Meanwhile, afternoon trade saw Japan’s Nikkei 225 gain 1% while Australia’s ASX200 rose 0.92%. While the Democratic Party are expected to pick up the 23 seats they require to flip the House of Representatives, the Republican Party has a 51-49 majority in the US Senate. With fewer Republican seats up for election in the upper chamber, the chances of wresting control of the senate are slimmer for the Democrats. While Asian investors do indeed have one eye on the midterm elections, the other one will be looking ahead to the next month once the dust settles. US President Donald Trump has escalated the trade war with China and although it is not a midterm election issue, a full resolution remains to be seen. “The next four weeks between the US midterm elections and the G20 meeting in Argentina on November 30 will be important to see how things progress,” said Tai Hui, chief market strategist for Asia Pacific at JP Morgan Asset Management. “Combined with the prospects of more economic stimulus from China and reasonable valuations in Asian equities, investors could use this opportunity to reload on emerging market and Asia assets. “The US dollar is still edging higher but Asia has been more resilient on handling greenback strength than other emerging markets,” added Hui. ©2018 funds global asia

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