Asian Stocks Advance, Dollar Weakens as Obama Wins Re-Election
Asian stocks rose, U.S. index futures pared losses and the dollar weakened after President Barack Obama won re-election. Metals prices climbed and Treasuries headed for the biggest gain in a week.
The MSCI Asia Pacific Index (MXAP) advanced 0.6 percent at 2:57 p.m. in Tokyo, while Standard & Poor’s 500 Index futures slid 0.3 percent after earlier dropping as much as 1 percent. The U.S. 10-year Treasury yield declined six basis points to 1.69 percent. The dollar fell against 15 of its 16 major peers and dropped 0.3 percent against the yen. Copper rallied 0.6 percent and gold increased for a third day.
Obama defeated Republican Mitt Romney, according to television network projections that show the president winning the electoral votes needed for re-election. He will need to address a so-called fiscal cliff of more than $600 billion in tax increases and spending cuts that take effect in 2013 unless Congress can reach a budget compromise. The Greek parliament votes later today on austerity measures needed to keep the nation’s bailout on track.
“Monetary policy will remain loose under Obama so the dollar will be sold,” said Michiyoshi Kato, the senior vice president of foreign-currency sales in Tokyo at Mizuho Corporate Bank Ltd., a unit of Japan’s third-largest bank by market value. “Dollar selling may not last that long as the U.S. faces the fiscal cliff.”
Gauges of materials, telecommunications and technology companies led gains on MSCI’s Asian index. Nissan Motor Co., the biggest Japanese carmaker in China by sales, rose 4.1 percent in Tokyo trading after saying orders and showroom visits rebounded.
The dollar fell 0.4 percent to $1.2864 per euro, after earlier gaining as much as 0.2 percent. It declined 0.4 percent to 80.04 yen. Japan’s 10-year bond yield was little changed at 0.755 percent, matching the lowest level since August.
Obama, a Democrat, backs the Federal Reserve, which has purchased $2.3 trillion of Treasuries and mortgage-related bonds and instituted plans to purchase $40 billion of home-loan securities a month to support the economy. Romney, a Republican, said he wouldn’t reappoint Fed Chairman Ben S. Bernanke to a third term in 2014. The U.S. plans to sell $24 billion of 10- year notes today.
Ever since Lyndon B. Johnson defeated Barry Goldwater for the presidency in 1964, yields on 10-year Treasuries have dropped about 40 basis points in the first month when a Democrat wins, and risen 19 after a Republican victory, according to data compiled by Bloomberg.
Copper for delivery in three months increased for a second day, advancing to $7,790 a metric ton. Zinc rose 0.8 percent and nickel rallied 1.5 percent.
Spot gold rose 0.5 percent to $1,724.03 an ounce after the biggest advance in more than seven weeks. The metal climbed 1.8 percent yesterday. Bullion advanced 10 percent this year and is set for a 12th annual gain after central banks took steps to stimulate economies hurt by Europe’s debt crisis. Silver and platinum also gained.
In Greece, Prime Minister Antonis Samaras faces a test of his coalition government as he seeks parliamentary approval of austerity measures to unlock bailout funds amid the third general strike in six weeks. Approval of the legislation is the first of the parliamentary votes required by Nov. 12 to receive a 31 billion-euro ($40 billion) portion of international aid. A roll-call vote is expected after 8 p.m. Athens time.
Oil pared losses of as much as 1 percent before trading 0.2 percent lower at $88.52 a barrel in New York. The gauge surged 3.6 percent yesterday.
China’s Communist Party will start a meeting in Beijing tomorrow that will formally pick the next generation of the nation’s leadership, with Xi Jinping expected to be chosen as general secretary.
“You have the two biggest economies in the world going through their own versions of leadership change this week so the political cycle will still dominate,” said George Boubouras, the Melbourne-based head of investment strategy at UBS AG’s Australian wealth management unit. The Swiss bank has about $1.5 trillion. “The backdrop looks promising to build on.”
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