Asian shares mixed as market await vote results, price data

NEW YORK: Asian shares were mixed on Wednesday as investors awaited the outcome of the US mid-term elections and a major inflation update due later in the week.

US futures edged lower and oil prices fell.

Tokyo's Nikkei 225 index slipped 0.6 per cent to 27,716.43 after the Cabinet on Tuesday approved a 29.1 trillion yen (USD 190 billion) supplementary budget to fund planned economic stimulus for the world's third-largest economy.

Chinese markets declined after the government reported consumer price inflation eased to 2.1 per cent in October from 2.8 per cent in September.

Producer price inflation (PPI) dropped into deflationary territory, falling to minus 1.3 per cent from 0.9 per cent in October, the 21st straight month in an even stronger sign that the No 2 economy is slowing.

"China inflation data printed a rather gloomy picture, with PPI remaining deflationary and CPI much weaker than expected, pointing to waning demand,'' Stephen Innes of SPI Asset Management said in a commentary.

Hong Kong's Hang Seng lost 1.5per cent to 16,307.72 and the Shanghai Composite index shed 0.4 per cent to 3,052.48.

In Seoul, the Kospi gained 0.8per cent to 2,418.70 while Australia's S and P/ASX 200 rose 0.6 per cent to 6,999.30.

All eyes were on the elections, which could determine how much is done in the next several years in Washington, and possibly beyond.

Americans were voting at a time of high inflation and warnings of recession and analysts say investors appeared to be betting that Republicans will gain control of at least one house of Congress.

That combined with a Democratic White House could stymie progress on legislation and increase the risk of a funding crisis for the federal government.

On Wall Street, the S and P 500 rose 0.6 per cent on Tuesday to 3,828.11, while the Dow Jones Industrial Average climbed 1 per cent to 33,160.83 and the Nasdaq composite gained 0.5 per cent, to 10,616.20.

If Republicans do end up wining control of at least the House of Representatives, the ensuing reaction in financial markets could be modest since stocks already have rallied in anticipation of such a change.

A surprise win by Democrats could upset the market if investors expect higher corporate taxes and other policy changes.

But a Republican win could also mean less help from Congress during a possible recession than under a Congress controlled by Democrats.

And economists are forecasting a downturn in coming months as interest rate hikes meant to tame inflation put the brakes on business activity and spending.

The important milestone for markets this week than US Election Day may be Thursday's report on inflation, which will affect the swift interest-rate hikes the Federal Reserve is pushing through to get it under control.

By raising rates, the Fed is intentionally slowing the economy by making it more expensive to borrow money. High rates also tend to drag down prices for stocks and other investments while raising the risk of a recession.

The Fed has already hiked its key overnight rate to a range of 3.75 per cent to 4 per cent, up from virtually zero in March, and more investors are expecting it to top 5 per cent next year.

A softer reading than expected on Thursday could give the Fed leeway to loosen up a bit.

Economists expect the report to show a continued, slight moderation from a peak set during the summer. But a worse-than-expected reading could have the opposite effect.

They dropped with crypto prices after the world's biggest crypto exchange by daily volume, Binance, said it intends to buy one of its bigger rivals, FTX.

Binance is making the purchase to help FTX manage a crunch where users have been pulling money out amid fears about its financial strength.

It's the latest crisis of confidence to slam the crypto industry this year, as prices have tumbled in part on worries about higher interest rates.

Bitcoin at one point sank below USD17,500 before pulling back to USD18,267, down 12.2 per cent from a day earlier, according to CoinDesk.

In other trading on Wednesday, US benchmark crude oil gave up 33 cents to USD 88.59 per barrel in electronic trading on the New York Mercantile Exchange.

Brent crude, the international pricing standard, lost 25 cents to USD95.11 per barrel in London.

The dollar slipped to 145.82 Japanese yen from 145.65 yen. The euro fell to USD 1.0062 from USD 1.0076.