Stocks Down Ahead of Pelosi’s Stimulus Deadline

This post was originally published on this site – Asia Pacific stocks were mostly down on Tuesday morning, reacting to the U.S. market’s poor overnight performance as the Nov. 3 presidential election approaches and time runs out to pass the county’s latest stimulus measures.

China’s Shanghai Composite was down 0.45% by 10:58 PM ET (2:58 AM GMT), while the Shenzhen Component edged up 0.13%, continuing to react to Monday’s mixed quarterly data. The data showed a less-than expected 4.9% growth in GDP year-on-year in the third quarter, indicating challenges ahead for what looks to be a strong Chinese economic recovery overall.

Hong Kong’s Hang Seng Index inched down 0.07%.

Japan’s Nikkei 225 was down 0.56% and South Korea’s KOSPI fell 0.77%.

In Australia, the ASX 200 was down 0.58%, with the minutes from the Reserve Bank of Australia (RBA)’s October meeting and comments from Assistant Governor Chris Kent widening expectations that RBA will introduce further monetary easing measures soon.

In the U.S., House of Representatives Nancy Pelosi’s statement on Monday that differences were narrowing in talks with Treasury Secretary Steven Mnuchin for the stimulus measures increased hopes for a deal to the be passed before the presidential election.

Despite Pelosi’s optimism, skepticism on whether Democrats will concede on their priorities for local governments, workers, schools and health care, and whether Pelosi will meet her self-imposed Tuesday deadline to reach a deal, remains.

Some investors pointed to other explanations for the decline.

“Risky assets are losing their mojo after disheartening virus updates, countless stimulus banter that will not yield anything until after the election, and central banks remain stuck in wait-and-see mode,” Oanda senior market analyst Edward Moya said in a note.

“The QE for life trade appears like it is not going away anytime soon, but that is not enough of reason to buy stocks now,” the note added.

Pepperstone head of research Chris Weston acknowledged investor worries over the stimulus measures, but said the recent declines were likely due to positioning ahead of the presidential election.

“Do you really want to hold those exposures into what could be a volatility event? We’re getting into the Wild West territory where it becomes whippier,” he told Reuters.

With only two weeks left until Americans head to the polls, investors will be tuning into the final debate between President Donald Trump and Democrat candidate Joe Biden, scheduled for Thursday.

An uptick in COVID-19 cases in the Midwest, including Wisconsin and other battleground states, is one challenge facing Trump as he stands for re-election.

Meanwhile, the number of global COVID-19 cases also continues its incessant rise, topping 40 million as of Oct. 20, according to Johns Hopkins University data.