• Asian stocks fell due to tech declines and political instability, with Japan's yen near a three-month low.
• Investors are cautious ahead of U.S. non-farm payrolls data, the presidential election, and a Federal Reserve policy decision.
• Regional tensions rose as North Korea test-fired a missile, while U.S. S&P 500 futures eased 0.35%.
• The U.S. Presidential election sees Trump and Harris neck-and-neck, with markets historically performing well post-election under Democratic presidents.

Asian stocks experienced a significant downturn on Thursday, with chip-sector stocks reflecting the overnight declines of their Wall Street counterparts. This was largely due to warnings from Meta Platforms, the owner of Facebook, about the escalating costs of artificial intelligence. The day also saw the anticipation of more megacap tech earnings from tech giants Apple and Amazon.

The Japanese yen remained close to a three-month low against the dollar, a situation exacerbated by political instability. The recent parliamentary elections saw a defeat for Japan's ruling coalition, which could potentially delay the normalization of monetary policy. However, the Bank of Japan, while maintaining rates, made no mention of the political situation, only reiterating the uncertainties surrounding the economic outlook.

Investors are treading cautiously ahead of the U.S. non-farm payrolls data due on Friday, the presidential election next Tuesday, and a Federal Reserve policy decision on Thursday. The Nikkei share average in Japan fell by 0.5%, and South Korea's Kospi dropped by 1.3%.

Regional Tensions and Market Reactions

Adding to the regional tensions, North Korea test-fired what a U.S. official identified as an intercontinental ballistic missile into the sea off its east coast. Meanwhile, Hong Kong's Hang Seng added 0.2%, but mainland Chinese blue chips slipped 0.7%. Investors are now awaiting more clarity on stimulus from Beijing next week, when officials convene a week-long congress.

In the U.S., S&P 500 futures eased 0.35%, while Nasdaq futures dipped 0.47%. The Philadelphia SE semiconductor index slumped 3.35% overnight, with Advanced Micro Devices tumbling more than 10% following dour forecasts. The U.S. dollar index was steady at 104.15 following its pullback from the highest since Aug. 2 at 104.63 reached on Tuesday. The dollar was a fraction lower on the yen at 153.36, but not far from this week's high of 153.885.

The U.S. Presidential Election and Market Performance

In the political arena, Vice President Kamala Harris is set to go head-to-head with Donald Trump in the upcoming 2024 election. With just weeks to go, Trump may be losing his grip on older generations of voters, with the latest New York Times polls showing the two candidates split by a hairline; and Harris ahead by 3 points.

In the final stretch of the U.S. presidential contest, opinion polls still put Republican Donald Trump and Democrat Kamala Harris neck-and-neck, although financial markets and some betting platforms have been leaning toward a Trump victory.

Oil prices extended a rally from Wednesday, driven by optimism over U.S. fuel demand following an unexpected drop in crude and gasoline inventories. Brent crude futures gained 0.5% to $72.90 a barrel and U.S. West Texas Intermediate crude futures climbed 0.5% to $68.93 per barrel. Both contracts rose more than 2% in the previous session.

In the context of the upcoming U.S. Presidential election, it's worth noting that historically, markets have performed well post-election under Democratic presidents, as seen with Biden in 2020 and Obama in 2012. These rallies are often fueled by expectations of economic recovery and stimulus measures, though broader economic factors (e.g., recovery from recessions) are key contributors.