U.S. Futures, Asian Stocks Rise Ahead of Election: Markets Wrap

(Bloomberg) -- U.S. futures and Asian stocks rose Tuesday ahead of the presidential election, while currency traders braced for increased volatility.

Shares in Australia, South Korea and Hong Kong climbed more than 1%. Japan is closed for a holiday and Treasuries won’t trade until London opens. S&P 500 contracts advanced after the benchmark equity gauge gained Monday following last week’s 5.6% drop.

Implied volatility for the offshore yuan spiked. The one-week tenor -- often used as a proxy of market risk -- has more than doubled in the past week to the highest since Bloomberg began compiling the data in 2011. Overnight gauges for the Australian dollar and sterling also jumped as the presidential vote and its aftermath loom.

“Uncertainty will likely remain until Wednesday morning when we should have clarity on who holds the Presidency and Senate, assuming and this is a big if, the polls are correct,” Sebastien Galy, a senior macro strategist at Nordea Investment Funds SA, wrote in a note.

With the election a day away, polls continue to show Democratic nominee Joe Biden ahead, though battleground states remain tight. Investors are fretting about the possibility the outcome will be contested, which means a clear winner might not emerge for some time, weighing on market sentiment. Also, while there has been a slight slowdown in virus cases in the U.S., several states continue to notch record numbers of infections.

“It’s pretty much a binary outcome,” said Quincy Krosby, chief market strategist at Prudential Financial. “The question is, is the market right now looking at a Biden victory? And will it be disappointed if we don’t have that?”

Once the U.S. election passes, investors will contend with the Federal Reserve delivering a policy decision Thursday before the October jobs report Friday.

Elsewhere, oil was steady after clawing back earlier losses amid signals that Russia, a key OPEC ally, is in talks to possibly postpone the group’s planned output hike in January.

These are some key events coming up:

The Reserve Bank of Australia has a rate decision Tuesday.Earnings are due from companies including Nintendo Co., Macquarie Group Ltd., Toyota Motor Corp., Alibaba Group Holding Ltd. and AstraZeneca Plc.U.S. Presidential election on Tuesday.EIA crude oil inventory report on Wednesday.Fed policy decision on Thursday.The U.S. labor market report is due Friday.

These are some of the main moves in financial markets worldwide:

Stocks

S&P 500 futures rose 0.4% as of 9:44 a.m. in Hong Kong. The S&P 500 Index climbed 1.2%.Australia’s S&P/ASX 200 Index rose 1.8%.South Korea’s Kospi index rose 1.6%.

Currencies

The yen traded at 104.76 per dollar.The offshore yuan was at 6.6851 per dollar.The Bloomberg Dollar Spot Index was steady.The euro was at $1.1645.The British pound was little changed at $1.2921.

Bonds

The yield on 10-year Treasuries declined three basis points to 0.84% on Monday.Australia’s 10-year bond yield fell two basis points to about 0.80%.

Commodities

West Texas Intermediate crude slipped 0.4% to $36.65 a barrel.Gold was at $1,894.11 an ounce, down 0.1%.

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