Asian markets mostly rose early Wednesday as investors tracked early results from the US midterm elections with Democrats looking on course to win back control of the House, which could impact Donald Trump's legislative agenda.

Equities and the dollar were fluctuating through the morning with results in many key constituencies on a knife-edge with turnout expected to be high.

But, while the vote is the first major electoral test of the Trump's presidency, analysts pointed out that the poll is unlikely to lead to a reversal of the White House's tax cuts and deregulation.

ICYMI

With memories of the volatility which ensued in the aftermath of the US presidential election in November 2016 still fresh in investors’ minds, risk-aversion was high today’s session.

Hong Kong stocks closed firmer as Chinese government officials reiterated that they would push for larger tax cuts in order to help small firms which were facing funding challenges. 

The Shanghai Composite Index dropped 0.6% however the Hang Seng managed to end the day 0.72% firmer.On the currency market, the US dollar was relatively weaker ahead of the US mid-term elections.

Emerging market currencies including the rand, were trading relatively flat in cautious trade. The rand did weaken to a session low of R14.28/$ but it rebounded to trade at R14.20/$ just at 17.00 CAT.

Rand may break below R14/$

In the US midterm elections it is almost certain that the Democrats will win back the House from the Republicans. The Republicans will hold onto the Senate, TreasuryONE said in a market snapshot on Wednesday morning.

US equities ended up overnight and Asian stocks also in the green today. The rally in emerging market currencies continue with the Indian Rupiah staging its biggest gain in a single day in the past 3 years.

The USD is on the backfoot a little and EUR and most other majors gaining. Locally the ZAR has also benefited and is trading at R14.05 currently, after having opened at R14.11. TreasuryONE expects the rand to test below the R14.00 level.

Bianca Botes, Corporate Treasury Manager at Peregrine Treasury Solutions, noted that overnight the rand rallied to R14.11. "The rand is holding firmly onto its gains, as it wanders in territory last seen in October, while the US dollar remains under pressure," she said.

Not too much is happening in terms of local data today, however we will see the market position itself later this afternoon for the interest rate decision from the US Federal Reserve due for announcement tomorrow, Botes said.  

The rand is stable this morning, making slow and steady gains against the greenback. The range for the day is expected to be R14.10 to R14.32.  

Market indicators from TreasuryONE:

USDZAR 14.0301

EURUSD 1.1461

EURZAR 16.0719

GBPUSD 1.3131

GBPZAR 18.4137

AUDZAR 10.1948

CADZAR 10.7006

CNYZAR 2.0229

ZARJPY 8.0559

CHFZAR 14.0245

Gold 1 229.41 

Plat 873.90 

Plad 1 115.10 

Rhod 2 415.00 

Irid 1 470.00 

Ruth 268.00 

Copp 6 184.00 

Brent 72.06 

Gold ZAR 17 240.14 

Plat ZAR 12 254.79