Eyes will also be on the Fed’s policy decision on Thursday, with expectations for another cut
Asian markets wavered Tuesday as traders scrambled for position a day before results from the US presidential election rolled in, with opinion polls showing the vote on an edge as the two candidates wrapped up their campaigns.
Uncertainty about the outcome and concerns that the winner might not be known for days has led to warnings that investors could be in for a period of volatility.
Eyes will also be on the Fed’s policy decision on Thursday, with expectations for another cut, while the post-meeting statement from Fed chair Jerome Powell will be pored over for an idea about plans for 2025.
A win for Republican Donald Trump is expected to support the dollar, restoke inflation and send Treasury yields higher owing to his pledges to cut taxes and impose tariffs on imports.
But analysts see less upheaval from a win by Democratic Vice President Kamala Harris.
Some view a second Trump term as a potential ticket to higher deficits and a dash of inflation, courtesy of his tax-and-tariff playbook, according to Stephen Innes at STI Asset Management.
A Trump victory with a Republican Congress would likely mean a green light for these pro-growth, deficit-stirring policies, he said.
With Harris and a divided Congress, radical Democratic policies would face a wall, keeping fiscal volatility in check compared to Trump’s economic flamethrower, he said.
He added that a Trump win and Republican sweep of both houses of Congress could cause headaches for Powell as he continues his battle to bring inflation to heel.
National Australia Bank’s (NAB) head of market economics, Tapas Strickland, said: Harder discussions come in December and beyond, particularly on the pace of potential cuts, where rates are likely to go, and any policy impacts by the next president and Congress.
