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Wall Street futures, Asia stocks fall as U.S. elections trickle in

Reuters  |  TOKYO 

By Hideyuki Sano

TOKYO (Reuters) - Wall Street stock futures and Asian shares dropped on Wednesday as early results of the U.S. midterm elections started to trickle in, with investors bracing for the Republicans to lose their grip on

U.S. S&P500 futures dropped 0.4 percent as Democrats are seen as likely to pick up a few closely-contested seats on the in the congressional elections, which is billed as a referendum on Donald Trump's polarising style and "America First" policies. The initial results also weighed on the dollar.

MSCI's broadest index of shares outside <.MIAPJ0000PUS> was flat in early trade while Japan's Nikkei <.N225> erased earlier gains.

Voter turnout in national elections, normally lower when the presidency is not at stake, could be the highest for a midterm election in 50 years.

The opposition Democrats are favoured by election forecasters to pick up the 23 seats they need to gain a majority in the House, but have slimmer chances of gaining control of the Senate, opinion polls show.

"We, like many other market players, expect Democrats to take the House and to have a split That should mean Trump won't be able to push for further tax cuts and could lead to a risk-off mood in markets," said Masahiro Ichikawa, at

"But that is probably already factored in, so I would think any additional selling in stocks would be limited," he said.

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 stood at 3.195 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 $61.79 a barrel having hit a low of $61.31 on Tuesday, the weakest price since March 16.

The dollar slipped broadly on concerns about Republicans defeat in the House.

The euro gained 0.3 percent to $1.1462 , hitting a two-week high.

The yen also rose 0.25 percent to 113.18 per dollar, bouncing back from a one-month low of 113.505 on Tuesday.

The British pound gained 0.2 percent to $1.3126, 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; 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. 06:58 IST