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Global Markets: Wall Street futures, Asia stocks seesaw as Democrats move closer to U.S. House win

Reuters  |  TOKYO 

By Hideyuki Sano

TOKYO (Reuters) - Wall Street stock futures and Asian shares erased most of their earlier gains in choppy trade on Wednesday, as results from the U.S. midterm elections showed Republicans close to losing their grip on

U.S. S&P500 futures were last up 0.15 percent, paring most of their 0.6 percent gain earlier, as the latest results improved the odds of opposition Democrats taking control of the

The is billed as a referendum on Donald Trump's polarising style and "America First" policies.

Investor sentiment has been volatile in Asian trade with stocks and the dollar swinging on the Republicans' fluctuating prospects of retaining the House. By late morning, broadcasters were projecting the Democrats to have wrested control of the House.

Asian shares retained most of their gains but were off their highs with MSCI's broadest index of shares outside up 0.3 percent while Japan's Nikkei rose 1.2 percent.

Leading into the election, investors had expected the Democrats to gain a majority in the House and, as a result, remained sceptical about Trump's proposal late last month on tax cuts for middle-income households.

Market participants had previously said a surprise House win by the Republicans could boost the chances of further tax cuts and pro-business policies while a Democrats' victory was likely to have already been priced in.

In the U.S. race, the Republicans held an upper hand, unseating a Democratic incumbent in Indiana, which Democrats badly needed to win that chamber.

"The House results so far are showing a better than expected performance for the Republicans, even if they don't keep the House," said Steven Englander, at in

"So it doesn't look like a big blue wave and Republicans might do a bit better than expected in the and the market is therefore reacting with a stronger dollar, higher U.S. yields and higher U.S. equities," he said.

On the other hand, many investors also expect Trump to continue to take a hard line on tariffs, which he can impose without Congressional approval. That keeps alive worries about a trade war between and the

Trump's massive tax cut, enacted in December, and a spending agreement reached in February have helped lift the U.S. economy, but they have also widened U.S. federal budget deficit.

As a result, Treasury supply has been growing, pushing U.S. bond yields higher.

The 10-year U.S. Treasuries yield fell about 1 basis points to 3.193 percent, near its seven-year high of 3.261 percent touched a month ago, as investors sold ahead of this week's record amounts of longer-dated government debt supply.

prices were soft after a 2 percent fall the previous day, with U.S. crude futures hitting an eight-month low as granted sanction waivers to top buyers of Iranian and as said it has so far been able to sell as much as it needs to.

U.S. Intermediate (WTI) crude futures traded down 0.7 percent at $61.78 a barrel having hit a low of $61.31 on Tuesday, the weakest price since March 16.

The dollar index recovered from early losses to trade slightly higher.

Against the yen, the U.S. currency rose to one-month high of 113.82 yen while the euro stood flat at $1.1427, retreating from a rise to two-week high of $1.1473.

The yen stood steady at 113.45 per dollar while the British pound changed hands at $1.3100, flat on the day.

Earlier the sterling hit a three-week high, extending gains on hopes of a Brexit deal breakthrough after said "Thumbs Up" on his way out of a cabinet meeting.

That helped sterling recover losses following remarks from a of the Northern earlier that it looked like Britain would exit the EU without a deal.

(Reporting by in Tokyo; additional reporting by in New York, Editing by Sam Holmes)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, November 07 2018. 10:43 IST
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