Emerging market stocks, FX steady well before US midterm elections

Emerging markets stocks and currencies held steady , with investors cautious before the US midterm elections, nevertheless the lira as well as rand both fell in my ballet shoes in four sessions.

Investors are bracing for your split Congress, with Democrats taking control of home of Representatives and Republicans holding their advantage inside the Senate, but you are mindful that President Donald Trump’s victory in 2016 surprised experts.

A split Congress could reduce trade tensions, as you move the dollar could fall under pressure which is unlikely any new fiscal stimulus can be launched to counterbalance forecasts of slowing US economic growth next season.

“Its wait and see,” said Trieu Pham, a growing market credit researcher at ING. “If the consensus view holds you have to would go to a somewhat softer dollar that should be good for emerging currencies.”

Jason Tuvey, a senior emerging market economist at Capital Economics, said moves within the wall street game is based on on Trump’s stance on trade.

“If he secures a big victory establishing might push ahead and require a more protectionist stance,” he explained.

The MSCI’s benchmark emerging equity was little changed, despite China stocks falling for any second day uninterruptedly amid concerns over the possible impact of a new technology board to list shares in Shanghai.

Hong Kong’s Hang Seng meanwhile firmed to close up by 0.58%, with many other Asian markets also firming.

Emerging market currencies could not benefit much through the greenback treading water killing the US elections, as gains in the yuan on optimism over Sino-US trade talks was offset by way of a stop by the lira as well as the rand.

While the South African rand softened 0.4% amid subdued risk appetite, the Turkish lira dipped 0.5%, despite investor optimism spanning a US waiver on sanctions targeting Iranian oil imports.

“Could there be a little profit taking here before elections,” Pham said with the lira, that has gained more than 7% during the last 10 sessions.

“The normal sentiment could be that the ties between the two countries (US and Turkey) are improving, so this is lending support. There still the amount of room left.”

The Johannesburg stock index snapped a four-day winning streak, but Russia stocks hit their highest in almost three weeks as data showed service sector activity hit an 11-month full off October.

Eastern European currencies were little changed.