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Stocks constant, currencies tense as United States votes

Stocks and bond markets were calm on Tuesday and an index of market volatility was controlled as markets waited for early indicators of the result of a knifeedge U.S. election, with only currency markets showing some jitters.

Overnight suggested volatility choices for euro/dollar spiked to the highest because November 2016, as did those for the dollar-Mexican peso set, in acknowledgment that the latter might be hard struck by protectionist policies if Republican Donald Trump defeats Democrat candidate Kamala Harris.

The VIX index of U.S. stock volatility, referred to as Wall Street's fear gauge, hovered at 22, up from 15 in September but still half the level seen in the previous 2020 election in a. sign that markets stayed reasonably sanguine.

Europe's benchmark STOXX index edged down 0.04% while MSCI's. broadest index of Asia-Pacific shares outside Japan. rose 0.87% higher, as stock markets held their. breath ahead of Wednesday's open.

U.S. markets looked set for a similarly stable open, with. S&P futures up 0.21% and NASDAQ futures up 0.37%.

Currencies, which unlike shares trade around the clock, saw. more action albeit still offering just spread and. inconsistent indicators of which candidate financiers were. betting on.

The dollar, which had reduced as traders made last tweaks to. positions, bought 152.13 yen and altered hands at. $ 1.0879 per euro.

They've priced what they believe is price-able which's. that, stated Westpac strategist Imre Speizer, including that a clear. win for Trump would lift the dollar, while a win for Harris. would push it a little lower.

Bitcoin added 2.6% to about $68,825, with Trump. viewed by analysts as enacting more beneficial policies for. cryptocurrencies than Harris.

Election Day ends an acrimonious project jolted by. assassination attempts on Trump and the withdrawal of President. Joe Biden in favour of Harris, with polls revealing the candidates. essentially tied.

Markets are on edge about how Trump's protectionist trade. policies in specific could stir inflation and struck exports in. the world's biggest consumer market, with bonds and the dollar. anticipated to move on the outcome of the election.

Ultimately the U.S. election boils down to this - whether. the U.S. electorate wants to choose economic policy. continuity, institutional stability and liberal democracy. ( Harris) or radical trade policy, a more retreat for. globalization and strongman democracy (Trump), J.P. Morgan. analysts said in a note. Simply put, a vote for stability or. modification.

BRACED

China is seen on the cutting edge of tariff danger and its. currency in particular is trading on tenterhooks with indicated. volatility versus the dollar around record highs.

The yuan hovered at 7.1034 per dollar, while. Chinese stock exchange surged to nearly one-month highs as. investors expect a conference of top policymakers in Beijing this. week to authorize city government debt refinancing and costs.

China's blue chip CSI300 leapt 2.5% and Hong. Kong's Hang Seng rose 1.4%.

The Australian dollar barely reacted after the reserve bank. held rates, as expected, with all eyes on the U.S. election, and. the Aussie was last partially firmer at $0.6614.

Treasury markets, which have actually priced in a U.S. rates of interest. cut for Thursday, held their ground in early European trading. with 10-year U.S. yields at 4.31%.

Euro zone bond yields edged up, with Germany's 10-year bond. yield climbing up 4 basis points to 2.43%, a little. below last week's three-month high of 2.447%.

Oil held sharp overnight gains on delays to manufacturers' plans. for increased output, leaving benchmark Brent crude futures. at $75.29 a barrel after a 3% rise on Monday.

When U.S. election results roll in after midnight GMT, the. focus will be on the battleground states of Georgia, North. Carolina, Pennsylvania, Michigan, Arizona, Wisconsin and Nevada.

A winner might not be known for days and Trump has signified. that he will try to eliminate any defeat, as he did in 2020.

(source: Reuters)