Market Update & Important Indicators:
U.S. stocks climbed Tuesday, reversing earlier declines, as voters went to the polls in a fractious U.S. presidential race. Stocks traded in a tight range earlier in the day, but rose to session highs in the afternoon in a broad market rally that reversed many of the morning's top trades. The CBOE Volatility Index — which is based on the price of options that investors tend to buy when they are fearful of stock-market declines — was down 2% after rising roughly 6% earlier in the session. Many investors and analysts said they had been watching the polls as the outcome remained too close to call. Some traders cautioned that the market's moves have come on thin volume, as many clients had already positioned themselves ahead of the election. Trading will likely continue to be volatile until the results of the election are clear, analysts said. Historically, stocks have risen more often than not in the period from election day through the inauguration, according to the WSJ Market Data Group. The Dow industrials have risen an average of 4.6% when the same party remained in power, and declined an average of 4% from election day to inauguration day after a party change. While stock markets fell in recent sessions, U.S. earnings quietly beat expectations, with S&P 500 earnings on track to grow in the third quarter from the year-earlier period, according to FactSet, after five consecutive quarters of contraction.
Asian equity markets were mostly flat Tuesday ahead of the U.S. presidential election, as investors awaited the outcome of a close race between Hillary Clinton and Donald Trump. Stocks in Asia initially opened higher to track Wall Street's overnight strength, but several key markets soon reversed into loss. Japan's Nikkei Stock Average gave up earlier gains of 0.3% and closed flat, while Korea's Kospi was up 0.3%. Stocks in Greater China were higher, though the markets have been stuck in range-bound trade for several sessions. Hong Kong's Hang Seng Index was up 0.3% and the Shanghai Composite Index added 0.5%. Government data on Tuesday showed China's exports continued to fall in dollar terms in October from a year earlier, albeit at a slower pace, as global demand for goods from the world's second-largest economy remained sluggish. In yuan terms, China's exports fell 3.2% in October from a year earlier, following a decline of 5.6% in September.
Australian shares closed only a tad higher as investors hung back ahead of the U.S. presidential election. Mining stocks outperformed, aided by a continued rise in prices for commodities such as iron ore and coal. The ASX 200 ended the session just 0.1% higher at 5257.8. Commonwealth Bank of Australia was down 0.6% after a first-quarter performance described as a "little light" by Watermark Funds Management. Other financial stocks were also mostly weaker.
On the London Metal Exchange, copper for delivery in three months was recently up 2.7% at $5,236/t. In the other base metals, nickel rose 1.2% to $11,218/t, aluminium rose 0.3% to $1,726/t, zinc rose 0.4% to $2,464/t, lead rose 1.9% at $2,110/t. Tin bucked the trend, falling 1.4% at $21,648/t.
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