• The U.S. presidential election uncertainty has boosted U.S. stock futures and the dollar in Asia.
• Analysts predict Trump's policies would put more upward pressure on inflation and bond yields than Harris' policies.
• The election's outcome is reminiscent of the 2000 U.S. presidential election, causing volatility in the stock market.
• The final outcome of the election remains to be seen, and its impact on the global economy will continue to be closely watched.

The U.S. presidential election has been a rollercoaster ride, with the race remaining too close to call. The early results have seen Republican Donald Trump winning eight states, while Democrat Kamala Harris has captured three and Washington, D.C. However, the critical battleground states are unlikely to be called for hours or even days. This uncertainty has led to a surge in U.S. stock futures and the dollar in Asia, with investors anxiously awaiting the final results.

The election's outcome has significant implications for the economy. Analysts generally assume that Trump's plans for restricted immigration, tax cuts, and sweeping tariffs, if enacted, would put more upward pressure on inflation and bond yields than Harris' center-left policies. Trump's proposals would also tend to push up the dollar while potentially restricting how far the Federal Reserve might ultimately be able to cut rates. Reflecting this, Fed fund futures for next year eased into the red with November off 7 ticks.

The Treasury yields have climbed as some betting sites swung to favor Trump, while futures markets were still confident the Federal Reserve will cut interest rates by 25 basis points on Thursday. The yields on 10-year Treasury notes rose to 4.351%, from 4.279%, and nearer a four-month high of 4.388% touched last week. Two-year yields climbed to 4.241%, from 4.189% late in New York.

Impact on Stock and Currency Markets

The election's impact on the stock market has been evident. S&P 500 futures gained 0.6% in choppy trading, while Nasdaq futures added 0.3%. EUROSTOXX 50 futures firmed 0.2%, while DAX futures tacked on 0.4% and FTSE futures 0.3%. MSCI's broadest index of Asia-Pacific shares outside Japan was little changed. Japan's Nikkei rose 1.2% as the yen slipped, tracking rallies on Wall Street overnight.

In currency markets, the dollar index added 0.8% to 104.19. The euro slipped 0.8% to $1.0834, having hit a one-month top of $1.0937 overnight. The dollar firmed 0.8% to 152.86 yen, and further away from a low of 151.34. The dollar gained 0.5% on the offshore yuan to 7.1375 yuan. China is seen on the front line of tariff risk, and its currency in particular is trading on tenterhooks with implied volatility against the dollar around record highs.

Chinese stock markets have surged to almost one-month highs as investors expect a meeting of top policymakers in Beijing this week to approve local government debt refinancing and spending. Chinese blue chips dipped 0.2% in early trade on Wednesday. A firmer dollar combined with higher bond yields left gold prices little changed at $2,744 an ounce and off a recent record peak of 2,790.15.

Historical Similarities and Market Reactions

The election's outcome is reminiscent of the 2000 U.S. presidential election, where the race between George W. Bush and Al Gore was too close to call, leading to a recount in Florida and a Supreme Court decision. The uncertainty during that period also led to volatility in the stock market. However, it's important to note that the current situation is unique due to the ongoing COVID-19 pandemic and its impact on the economy.

Oil prices were down in early Asia trade as markets nervously waited on the U.S. election results. They had risen overnight as a storm was expected to cut U.S. output in the Gulf of Mexico. U.S. crude lost 23 cents to $71.66 per barrel, while Brent fell 39 cents to $75.14.