SINGAPORE- Asian stocks turned lower on Tuesday while bond yields and the dollar hit multi-month highs and gold traded near record peaks as investors hunkered down ahead of the US election.
Benchmark 10-year Treasury yields rose three basis points in Asia to 4.21 percent, extending a sharp move higher and hitting the highest level since late July.
US and FTSE stock futures wobbled 0.2 percent lower. European futures rose 0.1 percent.
Investors also took some cash off the table in Japan, which has a general election coming up on Sunday with stocks, bonds and the yen all falling in tandem as polls have shown the possibility of the ruling coalition losing its majority.
Japan’s Nikkei was down 1.4 percent in afternoon trade to touch its lowest since early October, while the yen hit 151 per dollar for the first time since July and bonds tracked the selling in US Treasuries.
“It’s a small capital flight out of Japan,” said Naka Matsuzawa, Japan macro strategist at Nomura. More broadly, he said, markets were starting to speculate on a “red sweep”, delivering Republicans the White House and Congress in November.
“It’s not just Trump’s policies, it’s a higher probability of Trump winning meaning that the Republicans dominate,” he said. “That pushes up term premiums and inflation expectations.”
MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.7 percent with benchmark indexes in Australia and South Korea losing more than 1 percent
China’s markets were pinned well below recent highs while traders wait for more details and especially more government urgency and spending to support the ailing economy.
Hong Kong’s Hang Seng was near flat, while the Shanghai Composite inched 0.2 percent higher. Hyundai Motor India’s shares fell 2 percent in a tepid debut, with retail investors staying away.