Stocks swing higher as US vote goes to the wire, Alibaba tumbles

Share markets swung between losses and gains in wild Asian trading on Wednesday as results from the United States presidential election proved far closer than polls had predicted, leaving the outcome utterly in doubt.

Investors had initially wagered that a possible Democratic sweep by Joe Biden could ease political risk while promising a huge boost to fiscal stimulus.

But the mood quickly changed on signs President Donald Trump could well snatch Florida and was much closer in other major battleground states than polls had predicted.

US equity futures went on a wild ride, rising then falling, only to climb again as the voting seemed to favour Trump.

Some investors were now hedging against the risk of a contested election or at least a drawn-out process as mail-in ballots were counted.

“It’s a wait-and-see,” said Matt Sherwood, head of investment strategy at Perpetual in Sydney.

“I think the odds of a clean [Democrat] sweep are diminishing, almost by the minute. That reduces the possibility, or the likelihood at least, of a large stimulus program being agreed to in the first days of a Biden administration.”

That saw 10-year Treasury bond yields fall all the way back to 0.83 percent, from a five-month top of 0.93 percent.

Dealers said investors could be thinking a status quo result would at least lessen political uncertainty and remove the risk a Biden administration would roll back corporate tax cuts.

The tech sector seemed encouraged with NASDAQ futures rising 3.6 percent, while E-Mini futures for the S&P 500 swung 1.4 percent higher. The pan-European EURO STOXX 50 futures also turned 0.6 percent firmer, and United Kingdom’s FTSE futures gained 0.7 percent.

Japan’s Nikkei was ahead by 2 percent, while MSCI’s broadest index of Asia-Pacific shares outside Japan edged up 0.1 percent.

Chinese blue chips rose 0.5 percent, with markets uncertain how China-US relations would develop from here.

Hong Kong’s benchmark Hang Seng Index recouped early losses to be almost unchanged by midday in east Asia.

China suspended Ant Group’s $37bn stock market listing on Tuesday, thwarting the world’s largest initial public offering with just days to go, in a dramatic move that left investors and bankers scrambling for answers.

The Shanghai stock exchange first announced that it had suspended Ant’s initial public offering on its STAR market, prompting Ant to also freeze the Hong Kong leg of the dual listing, which was due on Thursday.

Shares of e-commerce giant Alibaba, from which Ant was spun off, slumped more than 9 percent in Hong Kong trade.

Dollar rollercoaster

The US dollar also had a rollercoaster session, reversing early losses to be last up 0.9 percent on a basket of currencies at 93.956. The euro fell back hard to $1.1644 and away from a top of $1.1768.

Investors are still awaiting the outcome of US Federal Reserve and Bank of England meetings this week, which are expected to at least give a nod to further stimulus.

The Reserve Bank of Australia on Tuesday cut interest rates to near zero and boosted its bond-buying program, adding to the tidal wave of cheap money flooding the global financial system.

Gold had recently been buoyed by all this liquidity but ran into profit-taking on Wednesday, losing 0.6 percent to $1,897 an ounce.

Oil prices held gains made after industry data showed crude inventories in the US dropped sharply.

Dealers noted a returned Republican administration would likely be more positive for the oil industry than Democrats who favoured renewable technology.

US crude were up 97 cents at $38.63 a barrel, with Brent crude futures gaining 93 cents to $40.64.