Asia report: Markets mixed as investors eye US election

Asia-Pacific markets closed in a mixed state on Tuesday as investors cautiously navigated global uncertainties surrounding the US presidential election and a potential interest rate decision by the Federal Reserve later in the week.

Patrick Munnelly at TickMill said stock markets remained largely stable as an “air of uncertainty” persisted in currencies and bonds ahead of the US election.

“Asian equities largely advanced, with Japan's Nikkei index surging over 1% as traders resumed trading after an extended holiday break,” he said.

“After Chinese premier Li Qiang expressed complete confidence in the nation achieving its economic targets this year and the potential for additional stimulus, the Shanghai Composite index in China increased by about 2.4%, and the Hang Seng index in Hong Kong increased by about 2.3%.

“The Standing Committee of the National People's Congress, the country's highest legislative body, is expected to announce a specific figure for the stimulus during its meeting this week.”

Munnelly noted that a private survey from Caixin revealed that China's service sector activity experienced the fastest growth rate since July, implying that consumer demand may be on the rebound.

“The dollar experienced a decline as the close presidential race resulted in the unwinding of ‘Trump trades’.

“Gold experienced a slight decline as a result of diminished anticipations of interest rate reductions.”

Most markets manage gains ahead of US presidential election

In Japan, the Nikkei 225 climbed 1.11% to 38,474.90, with gains driven by Nomura Holdings and Sumitomo Electric Industries, both surging over 10%.

The broader Topix index also rose, up 0.76% to 2,664.26.

Chinese markets performed strongly, with the Shanghai Composite advancing 2.32% to 3,386.99 and the Shenzhen Component jumping 3.22% to 11,006.94.

Notable gainers in Shanghai included Beijing Piesat Information Technology and Harbin Xinguang Optic Electronics, both up more than 13%.

Hong Kong’s Hang Seng Index rose by 2.14% to 21,006.97, buoyed by a 14.33% increase in Sunny Optical Technology Group and solid performances from Nongfu Spring and Li Ning.

South Korea’s Kospi 100 fell 0.63% to 2,573.82, weighed down by a 7.7% drop in SK IE Technology and declines in Samsung SDI and EcoPro Materials.

Australia’s S&P/ASX 200 dipped 0.4% to 8,131.80, with Domino’s Pizza Enterprises declining by 6.26%.

Mining companies Capricorn Metals and Ora Banda Mining also faced losses, contributing to the overall downturn.

New Zealand’s S&P/NZX 50 rose 0.54% to 12,658.30, with Synlait Milk and Air New Zealand leading gains.

In currency markets, the dollar was last 0.04% stronger on the yen, trading at JPY 152.19, as it weakened 0.49% against the Aussie to AUD 1.5111 and retreated 0.42% from the Kiwi, changing hands at NZD 1.6671.

Oil prices saw modest gains, with Brent crude futures last up 0.51% on ICE to $75.46 per barrel, and the NYMEX quote for West Texas Intermediate up 0.55% to $71.86.

RBA holds interest rates, inflation slows in South Korea

In economic news, Australia’s central bank maintained its benchmark interest rate at 4.35% for the eighth consecutive meeting on Tuesday, aligning with market expectations.

In its statement, the Reserve Bank of Australia highlighted that inflation had significantly cooled since peaking in 2022.

However, it cautioned that underlying inflation remained elevated.

Economists had broadly anticipated a rate hold, with ANZ predicting the first rate cut in early 2025.

Elsewhere, South Korea reported a 1.3% year-on-year increase in consumer inflation for October, marking the slowest pace since early 2021, according to LSEG data.

That figure slightly undershot the 1.4% forecast by Reuters and showed a steady decline from September’s 1.6% and August’s 2% rates.

On a monthly basis, inflation remained stable.

The Bank of Korea recently lowered its benchmark rate to 3.25% following nearly two years of steady rates, responding to the easing inflation trend.

Its next policy meeting was scheduled for late November.

In China, October saw the fastest growth in the services sector in three months, as measured by the Caixin/S&P Global services PMI, which rose to 52.0 from September’s 50.3.

The improvement reflected increased business activity, new export orders, and growing confidence in future output.

Service providers also boosted staffing levels, indicating optimism in the sector.

China’s parliamentary standing committee reviewed a proposal to increase the local government debt ceiling, state media reported on Monday.

The new debt would aim to replace “hidden debt”, a move previously hinted at by finance minister Lan Fo’an.

China’s local governments, which fund much of the country’s public services, had faced revenue shortfalls due to declining land sales.

Reporting by Josh White for Sharecast.com.