By Ese Erheriene
Shares fell sharply to multiweek lows across Asia on Wednesday, as a new poll showing Republican candidate Donald Trump leading the U.S. presidential race spooked investors.
Japan’s Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK -1.37% closed down 1.8% at 17,134.68 points, a two-week low. Australia’s S&P/ASX 200 /zigman2/quotes/210598100/delayed AU:XJO -1.98% ended 1.2% lower at a seven-week low. Elsewhere, Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI +0.84% was last down 1.3%, the Philippines’ PSE index /zigman2/quotes/204665276/delayed PH:PSE 0.00% fell 1.8%, Taiwan closed 1.4% lower at a six-week low, and the Shanghai Composite Index /zigman2/quotes/210598127/delayed CN:SHCOMP +1.69% was down 0.6%.
“The market in Asia is reacting badly to the ABC/Washington Post poll” that showed Mr. Trump leading, said Tareck Horchani, deputy head of APAC sales trading at Saxo Markets. “If Trump wins, it looks like we could get a massive selloff as the market is overall long risk assets.”
A recent ABC News/Washington Post tracking poll showed Trump with a one-point advantage over Democrat Hillary Clinton, leading 46% to 45%.
U.S. stocks broadly fell as investors pulled back from risk, which spilled over into the Asian session. The Mexican peso /zigman2/quotes/210561475/realtime/sampled MXNUSD -0.4406% , highly sensitive to developments in the U.S. presidential race, weakened to its lowest level since Oct. 7 and was recently down 0.6%. The Korean won /zigman2/quotes/210561437/realtime/sampled KRWUSD +0.0083% fell 0.4%.
Analysts and investors generally view Clinton as the more market-friendly candidate, and the mixed poll readings reminded some market participants of those released in the run-up to the unexpected result of the British referendum on leaving the European Union.
“It paints a similar picture as a few months back with Brexit and the shock on the day itself,” said Alex Wijaya, senior sales trader at CMC Markets. “Clinton is perceived to be more stable, whereas Trump is perceived as unpredictable, and markets don’t like uncertainty.”
In Japan, financial and exporter stocks were particularly hard hit as investors digested what a win for Trump would mean for markets, given his stance on trade and economic policies. Among individual shares, Sumitomo Mitsui /zigman2/quotes/203656770/delayed JP:8316 -1.43% shed 2.5% of its value, Mitsubishi UFJ Financial /zigman2/quotes/207520099/delayed JP:8306 -2.08% fell 2.4%, Suzuki Motor /zigman2/quotes/201794956/delayed JP:7269 +1.76% was down 1.8% and Honda Motor /zigman2/quotes/200490352/delayed JP:7267 -3.22% slipped 3.5%.
Safe-haven buying was seen across assets, with the Japanese yen /zigman2/quotes/210561789/realtime/sampled USDJPY -0.0241% up 0.3% versus the dollar, the Swiss franc /zigman2/quotes/210561065/realtime/sampled CHFUSD -0.0410% rising 0.2% against the U.S. currency and spot gold gaining 0.4%. Confidence in the probability of a U.S. interest-rate increase by the Federal Reserve in December dropped to 73.6% from 78.0% a day earlier.
The selling and flight to safety occurred despite bullish manufacturing data out of the U.S., Horchani said.
The Institute for Supply Management said late Tuesday that its manufacturing index rose to 51.9% in October from 51.5% in September, signaling that the U.S. manufacturing sector could be stabilizing after two years of challenging conditions.
Meanwhile, persistent skepticism that the Organization of the Petroleum Exporting Countries will hold together their production-cutting agreement continued to weigh on oil prices, depressing the share prices of regional producers. In Australia, Santos /zigman2/quotes/207349564/delayed AU:STO +5.87% was down 4.3%, while Japan Petroleum /zigman2/quotes/201212147/delayed JP:1662 +2.87% was off 2.6%, and Hong Kong’s PetroChina /zigman2/quotes/204979431/delayed HK:857 +9.68% slipped 1.9%.
South Korean coast guard fires at Chinese boat
The South Korean coast guard fired an M60 machine gun toward two Chinese boats that were allegedly fishing illegally in South Korean waters.
Elsewhere, shares in Thailand were muted amid reports that Crown Prince Maha Vajiralongkorn could ascend to the throne next month, after the death of King Bhumibol Adulyadej, the world’s longest-serving monarch, in October. The benchmark SET Index /zigman2/quotes/210598047/delayed TH:SET +2.96% was last down 0.5%.
In South Korea, President Park Geun-hye’s just-announced partial cabinet reshuffle wasn’t expected to cause ripples in the current policy, analysts said. Park nominated a new prime minister, a finance minister and a new head of the Ministry of Public Safety. Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 +2.34% closed down 1.4% at a four-month low, as the export-heavy nation reacted to the latest U.S. presidential polls.
Looking ahead, the markets will be focusing on the U.S. Federal Open Market Committee meeting on interest rates later in global trading day. According to CME Group’s FedWatch tool, the likelihood the Federal Reserve will announce a rate change is just 7.2%.