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Asia markets mostly rise as attention turns to US polls
Asian markets mostly rose yesterday as focus turned to the US midterm elections, which could impact Donald Trump’s presidency, while Apple suppliers suffered on reports the tech titan had cancelled plans to ramp up output of its new iPhone.
The US goes to the polls in the first major electoral test for Trump since he took the White House and embarked on an “America First” agenda that has split opinion across the country and globally.
While his tax cuts and deregulation have helped fire the economy and push stock markets to multiple record highs earlier this year, there is a growing concern that his long-running trade row with China is beginning to bite.
The vote has the added twist of an investigation that is looking at whether his campaign colluded with Moscow to win the 2016 election.
If the Democrats win both houses of congress, they could push harder for impeachment, fuelling uncertainty.
“These midterm elections carry a sizeable legal risk for the (Republicans) which could dent investor confidence as we will likely hear much more from (Russia probe lead counsel) Robert Mueller sooner rather than later,” said Stephen Innes, head of Asia-Pacific trade at OANDA.
Hong Kong added 0.7%, having lost more than 2% on Monday, while Tokyo was up more than 1% thanks to a weaker yen.
Sydney gained 1% and Seoul added 0.6%. Wellington rose 0.4% and Jakarta climbed 0.1%. However, Shanghai ended down 0.2% and Taipei lost 0.7%.
In early European trade, London and Paris each edged up 0.1%, while Frankfurt dipped 0.2%.
Hopes that China and the US can resolve their tariff row were given a boost by comments from Chinese vice president Wang Qishan that he felt the two sides would reach an agreement.
“Both China and the US would love to see greater trade and economic cooperation,” he told the Bloomberg New Economy Forum in Singapore.
“The Chinese side is ready to have discussions with the US on issues of mutual concern and work for a solu- tion on trade acceptable to both sides.” However, Scott Kennedy, deputy director of China studies at the Center for Strategic and International Studies in Washington, warned the row still has some time to run.
“We’re going to see these two sides continue to dig in their heels — both sides still think they have the upper hand,” he said. “They’ll continue to do this dance, and all of us will continue to watch.”
Technology firms were among the worst performers, with companies that supply Apple taking a hit after a report in Japan’s respected Nikkei business daily said it had told Taiwan’s Foxconn and Pegatron to scrap planned new production lines for the iPhone XR.
Pegatron fell 4.6% though Foxconn bounced back to rise 0.2% while other tech companies were being sold off.
Alps Electric in Tokyo sank 0.8%, Samsung dropped 0.1% in Seoul and AAC Technologies was 3.5% lower in Hong Kong.
Seoul-listed LG Display was 0.6% lower and Japan Display gave back 3.7%. Firms linked to Apple were already under pressure after the US giant last week reported weaker-than-forecast iPhone sales and said it would no longer reveal how many it had shifted in its earnings.
Apple shares have fallen almost 10% since Thursday.
Past Tuesday’s elections, traders are looking at the Federal Reserve’s latest policy meeting, which is not expected to see another interest rate hike but will be followed for clues about its plans for future moves.
Expectations of more rises have pushed the dollar higher against its peers, though the pound is enjoying some buying as hopes grow that officials are close to an agreement on a post Brexit-deal for Britain.
In Tokyo, the Nikkei 225 ended up 1.1% to 22,147.75 points; Hong Kong — Hang Seng closed up 0.7% to 26,120.96 points and Shanghai — Composite closed down 0.2% to 2,659.36 points yesterday.