Stocks rise as global markets await U.S. election result

Investors worldwide are watching the U.S. election closely, as the race to determine the next president of the world’s largest economy is expected to have broad implications for global markets, particularly in Asia. On Wednesday, stock markets across Asia showed mixed results while the U.S. dollar rose.

The election outcome could significantly impact the global economy, especially in Asia, where many nations depend on steady trade relations with the United States. However, with vote counting in key swing states potentially extending over several days, the election result may not be clear during Asian trading hours, adding an element of unpredictability to the market.

In the United States, futures trading indicated gains on major stock indexes. This optimism followed Tuesday’s trading session, where the Dow Jones Industrial Average, S&P 500, and Nasdaq all closed over 1% higher. Meanwhile, Bitcoin surged to a record high of more than $75,000, reflecting investors’ appetite for alternative assets amid economic uncertainty.

Tim Waterer, chief market analyst at KCM Trade, noted that fluctuations across markets are still possible as assets sensitive to the election outcome, such as the U.S. dollar and Chinese stocks, could respond sharply to developments. By Wednesday, the U.S. dollar had risen by over 1% against major currencies, including the euro, pound, and Japanese yen according to sources.

Former President Donald Trump, who has hinted at significant trade policy changes, particularly regarding China, has indicated that he would increase tariffs if he wins. His protectionist stance has raised concerns across Asia, where economies are closely linked to global trade flows. Katrina Ell, director of economic research at Moody’s Analytics, pointed out that Trump’s approach to tariffs is causing tension in Asia, where there is apprehension over potential disruptions to trade routes and costs.

In addition to trade, Trump’s foreign policy approach, particularly his views on Taiwan, has implications for the technology industry. Taiwan is a leading producer of computer chips, crucial for the global technology sector.

Trump’s business-friendly agenda, particularly his tax-cutting proposals, has been broadly welcomed by American corporations. Jun Bei Liu, a portfolio manager at Tribeca Investment Partners, suggested that a Trump victory could spur pro-business policies, potentially driving up inflation and slowing the pace of interest rate cuts.

If Kamala Harris wins, investors expect her approach to trade and foreign policy to largely mirror that of President Joe Biden. Ell observed that a Harris administration would likely maintain the current trade policies, providing stability in global trade flows and tariffs. A Harris administration would also likely increase regulations on sectors like banking and healthcare, and promote renewable energy policies, benefiting industries such as electric vehicles and solar power.

Beyond the election, investors are focusing on several other key events this week. On Thursday, the U.S. Federal Reserve is set to announce its latest decision on interest rates, with central bank head Jerome Powell’s comments likely to be scrutinized globally. Friday will see Chinese officials outline more of Beijing’s plans to address economic challenges, as the world’s second-largest economy grapples with a slowdown.