SYDNEY- US stock futures and the dollar surged in Asia on Wednesday as investors wagered Republican Donald Trump could win the US presidential election, though officially the race remained too close to call.
MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.8 percent, while Japan’s Nikkei rose 2.3 percent as the yen slid.
European stocks were less enthused as Trump’s tariff policies, if enacted, could ignite a global trade war and threaten EU exports.
EUROSTOXX 50 futures lost 0.7 percent, while DAX futures dropped 0.5 percent and FTSE futures turned flat.
Trump took the early lead over Democrat Kamala Harris as solid Republican-leaning states reported first, but critical battleground races, in the handful of states likely to decide the election, were unlikely to be called for some time yet.
Treasury yields shot to four-month highs as some betting sites heavily favored Trump, while The New York Time’s closely-watched swingometer projected an 89 percent chance of him winning.
Analysts generally assume Trump’s plans for restricted immigration, tax cuts and sweeping tariffs if enacted would put more upward pressure on inflation and bond yields, than Harris’ center-left policies.
Trump’s proposals would also tend to push up the dollar and potentially limit how far US interest rates might ultimately be lowered.
Thus while markets were still confident the Federal Reserve will cut interest rates by 25 basis points on Thursday. futures for next year eased into the red with December down 9 ticks.
“As the early results come in, even though none of them are that surprising, we are seeing Treasury yields rising a little bit, the dollar strengthening, bitcoin up; kind of a classic Trump trade,” said Brian Jacobsen, chief economist at Annex Wealth Management. Yields on 10-year Treasury notes jumped to a four-month high of 4.471 percent, from 4.279 percent, breaking last week’s top of 4.388 percent. Two-year yields climbed to 4.291 percent, from 4.189 percent late in New York.