Most Asian markets extend losses as US vote approaches

Hong Kong, China | AFP | Friday 11/4/2016 – A sharp fall in Tokyo led losses in most major Asian stock markets Friday, as traders fret over next week’s US election, with the dollar weakening further and safe-haven gold maintaining its lustre.

The pound also built on Thursday’s gains to sit at one-month highs, after judges told Britain’s government it must approve June’s referendum to leave the European Union.

Trading floors around the world have been plunged into turmoil this week, as market favourite Hillary Clinton’s lead over maverick rival Donald Trump has been slashed days before the 8 November poll.

The former secretary of state is considered by most investors to be a safer, more stable bet than Trump, who is seen as a loose cannon, with policies many fear could wreck the world’s top economy.

“Markets are currently attempting to strike the right balance between the greater probability of a Clinton win and the possibility of a significant selloff on a Trump victory,” Ric Spooner, chief market analyst in Sydney at CMC Markets, said.

On Wall Street, the S&P 500 and Nasdaq fell for the eighth straight day, while the Dow ended in the red for the sixth straight session. And the Vix volatility index, which measures market fear, soared 14 percent to its highest levels since Britain’s shock vote in June to exit the European Union.

Those losses spread to Asia again, with Tokyo – which was closed for a holiday Thursday – ending the morning 1.4 percent lower.

Adding to selling on the Nikkei was a surge in the yen against the dollar, as traders rush to safe investments while speculation swirls the Federal Reserve will hold off an expected interest rate hike in December if Trump wins, owing to fears about the economy.

The greenback bought 102.90 yen in Asia, from 102.93 yen in New York and well down from the 105.30 yen mark touched earlier this week.

Sydney was down 0.7 percent, Seoul fell 0.2 percent and Singapore slipped 0.3 percent, while Hong Kong was flat. There were also losses in Wellington. However, Shanghai edged up 0.2 percent.

The pound pushed on against the dollar and euro after Thursday’s rally that came after the High Court’s decision in London, which throws Prime Minister Theresa May’s plans for a quick withdrawal into doubt.

Sterling was heading towards the US$ 1.25 level in Asia, well up from the sub US$ 1.22 seen on Monday.

The search for safety has also sent traders into gold, which is considered a hedge against turmoil. The yellow metal was at US$ 1,302 in Asia – a one-month high.

The next big event before the election is the release later Friday of US jobs data, which could cement expectations for a rate hike next month.