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dow jones asx watching us midterm election results

Written by The ReReport



THE Australian share market is set to edge lower at the open despite Wall St holding on to small overnight gains, with investors cautious ahead of US mid- term election results.The SPI200 futures contract was down 7 points, or 0.12 per cent, to 5,843.0 at 0700 AEDT on Wednesday, pointing to a subdued open for the ASX after banking, energy and resources stocks lifted the bourse on Tuesday.The Australian dollar is steady, buying 72.15 US cents, just a smidgen down from 72.16 on Tuesday.Stocks rose on Wall Street overnight as strong earnings and easing of trade tensions lifted materials and industrial sectors, but trading volumes were light amid uncertainty about the outcome of the midterm vote.The Dow Jones Industrial Average was up 141.44 points, or 0.56 per cent, at 25,603.14, the S&P 500 was up 13.93 points, or 0.51 per cent, at 2,752.24 and the Nasdaq Composite was up 49.99 points, or 0.68 per cent, at 7,378.84.EUROPEAN EQUITIES SLIP AS AMERICANS VOTE— AFPEuropean stock markets slipped Tuesday on trepidation over US midterm elections seen as a referendum on Donald Trump’s presidency, while US markets showed small gains, dealers said.Key European markets were down by up to one per cent at the close, while Wall Street reversed early declines to post timid gains approaching midday in New York.But US market gains appeared less than solid, with Briefing.com analyst Patrick O’Hare saying “don’t be surprised if today’s action has a seesaw feel to it”.Most analysts expect the Democrats will win the House of Representatives, while the Republicans hold onto control of the Senate.Conventional market wisdom says that equity prices should fall if the Republicans lose both Houses, and should rise if they retain both, dealers said.Earlier Tuesday, Asian indices had mostly ended higher.The dollar was under pressure against European currencies.“Americans will cast their crucial votes in today’s midterm elections, which for many will be a referendum on Trump’s presidency,” noted Rabobank analyst Jane Foley.“It’s not a surprise to see a mixed picture across global equity markets … as investors are very much in a ‘wait-and-see mode’ ahead of today’s US midterm elections,” noted Oanda analyst Dean Popplewell.“The latest polls suggest the Democrats have a good chance of winning the House and the Republicans have a good chance of retaining the Senate.“But, if the Republicans surprisingly hold Congress (both houses), the dollar, stocks and Treasury yields would get a lift on the promise of Trump-onomics 2.0.”At stake are all 435 seats in the House of Representatives, 35 seats in the 100-member Senate, 36 governor’s posts and seats in state legislatures across the country.For almost two years, Trump’s sometimes chaotic administration has enjoyed a largely free hand from the twin Republican-controlled chambers, but the midterms could see his wings clipped.However, the booming economy traditionally favours the incumbent at this stage of a first-term presidency.New figures on the eve of the polls confirmed that job growth is soaring and Trump gives himself credit for the “hottest economy on Earth”.“Businesses are keeping a wary eye on developments as a number of Trump’s policies, including massive tax cuts, had fuelled a nearly 30-percent rally in the stock market this year,” noted City Index analyst Fiona Cincotta.Tuesday represents the first major electoral test for Trump since he took the White House two years ago and embarked on an “America First” agenda that has split opinion across the country and globally.While his tax cuts and deregulation helped fire the economy and push stock markets to multiple record highs earlier this year, there is a growing concern that his long-running trade row with China is beginning to bite.The vote has the added twist of an investigation that is looking at whether his campaign colluded with Moscow to win the 2016 election. If the Democrats win both houses of congress, they could push harder for impeachment, fuelling uncertainty.Originally published as ASX cautiously awaits US vote



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