Asian markets alternated between rebounds and corrections as political uncertainty receded after the US Democratic Party secured majorities in both the Senate and the House of Representatives. South Korea and Taiwan were mixed, Singapore fell, and Indonesia recovered partially but remained weak.
As risk aversion over political uncertainty eased following reports that the US Democratic Party had secured majorities in both the Senate and the House of Representatives, Asian markets moved in different directions during the day. The KOSPI rose 0.6% after plunging the previous day, while Taiwan fell 0.8%, reflecting a mix of short covering and selling.
Investors are closely watching congressional policy developments, including regulations affecting AI-related and data center stocks, and some believe equity market reactions could diverge depending on the results in Dallas. Market participants also said that the impact of sweeping legislative changes may be limited given the possibility of a veto by the White House.
Singapore's STI fell as much as 1.5%, taking its decline from its year-to-date high to more than 10%. Among individual stocks, Unit's earnings drew market attention, while United Overseas Bank's quarterly profit fell short of market expectations. DBS's third-quarter results are expected to be a focus going forward.
Indonesia's market recouped some of its losses but remained in negative territory. In currencies, the rupiah came under pressure against the dollar, while news of tighter regulations, against the backdrop of an MSCI warning, also influenced market sentiment. Thailand saw little movement following the reported upgrade to its economic outlook, and its currency was generally stable.
Among regional currencies, the South Korean won rose slightly, while the Malaysian ringgit was broadly flat and settled. Overall, expectations grew that the impact of the new political landscape would be limited to a short-term reaction.