Asian stocks decline on expectations for Democrat-controlled US Senate
|Risk sentiment has weakened, with major news agencies predicting a Democrat victory in Georgia elections.
Major Asian equity market indices such as Nikkei, S&P/ASX 200, Hang Seng are trading lower, and the Shanghai Composite index is trading flat. Meanwhile, growth-sensitive currencies like the AUD, NZD, CAD are losing ground against the greenback.
"Both Democrats remain heavily favored, despite their deficit in the tabulated vote. They're favored to win the vote left to be counted by 9 to 10 points," The New York Times' Nate Kohn tweeted a few minutes ago.
A Democrat-controlled Senate is widely expected to deliver more significant fiscal stimulus and pave the way for President-elect Joe Biden to push through greater corporate regulation and higher taxes.
The losses in the Asian stock markets and the S&P 500 futures suggest investors are currently focusing on potential regulation and higher taxes. Also, investors are concerned about what a Blue Sweep could mean for tech companies moving forward.
The anti-risk US dollar will likely see a stronger corrective bounce if the risk aversion worsens. However, that would be an opportunity to sell, according to Citi analysts. "We favor maintaining short USD positions into the election and would add to positions on any USD rallies," Citi analysts said, according to Reuters.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.