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Asian stocks turned from black to red after the results of the US midterm elections became clear. Technology stocks, the US dollar and US bond yields were once hit by risk aversion, but then stabilized as uncertainty receded and bargain hunting returned.
Asian stock markets turned from black to red in afternoon trading on the 4th. Selling pressure was originally attributed to uncertainty surrounding the US midterm elections.democratic party It quickly recovered from its intraday low after it firmly took control of both houses of the US Congress.
As news of the Democratic Party’s “blue wave” continues to spread across the United States,asian stocks Investors initially sold stocks and US dollars in early trading on the 4th, and bought US government bonds to avoid risk.
The market’s biggest concern about a sweeping Democratic victory is that the Democratic Party will hinder artificial intelligence (AI) investment plans, which will hurt technology companies and weaken the US dollar.
However, Asian shares rose in afternoon trading, with analysts pointing out that the main reason was that uncertainty about the election had eased, even if the election results were not as expected by market participants.
Nana Chan, chief investment strategist at Saxo, speculated that the reversal in Asian stock closing trends may reflect two key factors: an initial reaction due to bargain hunting and investors’ reappraisal of the US election results. He said: “AsUS stocks The market heaved a sigh of relief as the futures improved and this feeling of relief spread to Asian technology stocks. “
Dow Jones data showed that US stock futures pared their losses, with Nasdaq-related stocks in the lead. Soon after, Asian stock benchmark indexes bounced off intraday lows, helping the most sold stocks recoup their losses in one fell swoop, and turned from the black to the red.
Meanwhile, the US dollar index steadied after hitting its lowest price more than a month ago.
The US Treasury market also calmed down, with the benchmark 10-year US Treasury yield rising to 4.942%. Earlier, as safe-haven buying increased, it once reached 4.900%, which was the lowest level since the beginning of September. Bond yields have an inverse relationship with prices.
“Bonds may benefit from lower growth expectations, but for the rally to continue, this needs to be confirmed by economic data and inflation trends, not just election headlines,” Chanana said.
The biggest concern in financial markets ahead of the election is that if the Democratic Party wins a landslide victory, it could cause a massive halt to the pace of AI spending, which would not only remove the pillar that has supported most of US economic growth in recent years, but also affect the economies and stock markets of Asian countries. If so, it would be bad news for Asian AI infrastructure stocks, which have recently been hit by a wave of selling pressure, reflecting investors’ concerns that valuations are already high and future investment returns may be much lower than expected.
However, it appears that the bulls have regained control. The Nikkei 225 index and the Taiwan Weighted Index fell 1.4% and 0.8%, respectively, to close in fourth place. South Korea’s Kospi index and Hong Kong’s Hang Seng index both rose 0.6% and 1.67% from intraday lows, respectively.
Analysts remind investors not to overinterpret the market’s reaction to the midterm election results. After the elections it is better to focus on returning to basics.
“This election outcome could impact the path of fiscal talks and create short-term market volatility, but economic growth, corporate earnings, AI investment, inflation and interest rates are the more important market drivers,” said Heifel, chief investment officer of global wealth management at UBS Group.
