Stock markets have moved sideways and an uneasy calm has settled over currencies and bonds as investors wait for the United States to choose a new leader, with polls showing the contest on a razor's edge.
Oil held on to strong overnight gains on delays in producers' plans to increase output, leaving benchmark Brent crude futures at $75.08 a barrel after rising 3% on Monday .
MSCI's broadest index of Asia-Pacific stocks outside Japan was flat. Tokyo's Nikkei returned from vacation and rose 1.3% in morning trading.
S&P 500 futures rose 0.1%.
The dollar, which fell overnight as traders made final adjustments to their positions, bought 152.35 yen and traded at 1.0875 dollars per euro.
“They have priced what they think is achievable and that's it,” said Imre Speizer, a strategist at Westpac, adding that a clear victory by Republican Donald Trump would send the dollar higher, while a victory of Democrat Kamala Harris would push it down a little further.
Election Day ends an acrimonious campaign rocked by assassination attempts against Trump and President Joe Biden's withdrawal in favor of Harris, with polls showing the candidates virtually tied.
Markets are worried about how Trump's protectionist trade policies, in particular, could fuel inflation and hit exports in the world's largest consumer market, with bonds and the dollar expected to move depending on the outcome of the election.
“Ultimately, the American election comes down to this: does the American electorate want to vote for economic policy continuity, institutional stability and liberal democracy (Harris) or for radical trade policy, a new decline of globalization and a strong democracy (Trump)? “In short, a vote for stability or change”.
BRACED
China is seen as being at the forefront of tariff risk and the currency, in particular, is trading on a razor's edge, with implied volatility against the dollar reaching record highs.
The yuan held steady at 7.1065 per dollar, while foreign exchange markets remained stable. Traders have been keeping an eye on the Reserve Bank of Australia's decision, due at 0330 GMT, although no policy change is expected and most are staying on the sidelines in order to trade quickly election results.
The Australian dollar held steady at $0.6590. [AUD/]
“Simply, if Harris wins, we like to sell the dollar/yen and buy the Australian dollar,” Citi currency strategists said. “If Trump wins, we prefer to buy the dollar against the euro, the Swedish krona and the Norwegian krone.
Treasury markets, which also priced in a cut in US interest rates for Thursday, maintained their position in Asia with US 10-year yields at 4.30%.
Bitcoin, which is seen as a beneficiary of a looser regulatory environment if Trump wins power, sold off recent highs and was steady at $67,924 on Tuesday.
When results come in after midnight GMT, attention will shift to the battleground states of Georgia, North Carolina, Pennsylvania, Michigan, Arizona, Wisconsin and Nevada. .
The winner may not be known for several days and Mr. Trump has indicated he will try to fight back any defeat, as he did in 2020.
