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Global shares waver as US midterm vote yields mixed outcome

November 7, 2018
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Men look at an electronic stock board showing Japan's Nikkei 225 index at a securities firm in Tokyo Wednesday, Nov. 7, 2018. Asian shares were mostly higher Wednesday as investors awaited results from the U.S. midterm elections, which could have an impact on the global economy and trade. (AP Photo/Eugene Hoshiko)

TOKYO (AP) — Global shares were mixed Wednesday, reflecting uncertainty over the implications of U.S. midterm elections, as the Democrats look set to regain a majority in the U.S. House of Representatives.

While the outcome of the vote was largely expected, it does potentially complicating President Donald Trump’s legal troubles and policymaking agenda. It was unclear how the divided Congress might impact Trump’s pursuit of an “America first” trade strategy that has drawn the world’s two biggest economies into a trade war.

“European and U.S. futures are struggling to make up their mind as investors digest the implication of the midterm election,” said Naeem Aslam of Thinkmarkets.com.

“One thing is for certain, the midterm election was mainly about Trump. President’s policies have divided the country and this was the first major political test of his presidency,” he said in a commentary.

Europe seemed encouraged by the results: France’s CAC 40 rose 1.3 percent to 5,141.65, while Germany’s DAX added 1.2 percent to 11,620.55. Britain’s FTSE 100 gained nearly 1.0 percent to 7,110.71. Futures advanced, with the contract for the Dow up 0.6 percent at 25,783.00 and S&P 500 futures surging 0.7 percent to 2,779.50.

Most Asian benchmarks spent a large share of the day in positive territory but retreated in late trading. Japan’s benchmark Nikkei 225 gave up 0.3 percent to finish at 22,085.80 and South Korea’s Kospi slipped 0.5 percent to 2,078.69. The Shanghai Composite fell 0.7 percent to 2,641.34.

But Hong Kong’s Hang Seng edged 0.1 percent higher to 26,147.69 and Australia’s S&P/ASX 200 rose 0.4 percent to 5,896.90. Shares also rose in Singapore and Taiwan.

A primary concern is the potential for dents in pan-Pacific trade that might hobble growth for export-reliant economies. Trump has imposed penalty tariffs of up to 25 percent on $250 billion of Chinese imports, and Beijing has responded with tariffs on $110 billion of American goods.

“The real question is whether the outcome of the midterms will in any way diminish Trump’s influence on the Congress, and whether his executive reach on global trade and other multilateral engagements will be reined in,” Mizuho Bank said in a commentary.

The election’s implications for currencies were another concern. A weaker dollar can help U.S. exports but hurt exporting economies of Asia. As of late Wednesday in Asia, the dollar was holding relatively steady at 113.07 yen, down from 113.36 a day earlier. The euro climbed to $1.1487 from $1.1427.

Oil prices have slipped after the U.S. said it would allow a group of allies to continue buying oil from Iran as long as they continued to try to reduce their imports from that nation. The U.S. reinstated sanctions on Iran this month.

Benchmark U.S. crude oil fell 25 cents to $61.96 in electronic trading on the New York Mercantile Exchange. It fell 1.4 percent to $62.21 a barrel in New York Tuesday. Brent crude dipped 17 cents to $71.96.

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Yuri Kageyama is on Twitter at https://twitter.com/yurikageyama

On Instagram at https://www.instagram.com/yurikageyama/?hl=en

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