GLOBAL MARKETS-Asia shares near 3-yr high, bonds hold gains on U.S. gridlock bets

* Asian stock markets : https://tmsnrt.rs/2zpUAr4
* MSCI ex-Japan index hits highest since early 2018
* Wall St wagers election to result in gridlock for Biden
* Lessens risk of regulation, tax rises
* Bonds well bid on diminished chance of govt spending
* Fed policy in focus, pound off on talk of negative rates

By Wayne Cole
SYDNEY, Nov 5 (Reuters) - Asian shares climbed on Thursday
and bonds extended their blistering rally as investors wagered
the likely prospect of U.S. policy gridlock would greatly favour
some industries while putting a restraining hand on government
borrowing.
The risk of a prolonged contested election remained, though
the count was progressing in an orderly fashion with Democratic
challenger Joe Biden narrowly ahead in key states.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS climbed 1.3% to reach its highest since
February, 2018. Japan's Nikkei .N225 rose 1.1% to a nine-month
top and South Korea .KS11 put on 1.5%.
Chinese blue chips .CSI300 gained 0.8%, aided by talk a
Biden White House might ease back on trade war tariffs.
E-Mini futures for the S&P 500 ESc1 edged up 0.1%, after
sharp gains overnight, while EUROSTOXX 50 futures STXEc1 eased
0.3%.
Both President Donald Trump and Biden have paths to 270
Electoral College votes as states tallied mail-in ballots. Biden
remained optimistic on winning while the Republican incumbent
filed lawsuits and demanded recounts. (For the latest election results and more coverage, click:
https://www.reuters.com/world/us-election2020)
Betting sites swung toward Biden as the results trickled in,
having earlier heavily favoured Trump. Yet the prospects of the Democrats taking the Senate also
dimmed, pointing to deadlock should Biden take the White House.
"A Biden win without full Senate support means less risk of
regulation and higher corporate/personal taxes," wrote analysts
at Nomura in a note.
"Asset market reaction over the past 24 hours confirms this
view, with the US10-year yields declining sharply, and U.S.
tech/WFH/structural growth stocks outperforming on prospects of
less economic aid."
Technology and healthcare stocks duly led the charge higher
overnight while those leveraged to consumer demand lagged. With
tech stocks accounting for such a large share of the indices,
the S&P 500 .SPX gained 2.20% and the Nasdaq .IXIC 3.85%.
Bond markets assumed a divided government would greatly
reduce the chance of debt-funded spending on stimulus and
infrastructure next year, and thus less bond supply.
That saw 10-year Treasury yields tumble all the way back to
0.74% US10YT=RR , having touched a five-month top of 0.93% at
one stage on Wednesday.
The overnight drop of 11 basis points was the largest
single-day move since the COVID-19 market panic of March.
The diminished chance of massive U.S. fiscal stimulus will
also pile pressure on central banks globally to inject further
liquidity, just as the Federal Reserve and Bank of England hold
policy meetings.
"Both could be interesting given the need for central banks
to do more," said Chris Beauchamp, chief market analyst at IG.
"The Fed in particular will have to take up its QE role
again with a weary sigh, in order perhaps to provide yet another
bridge to the future when, hopefully, a government stimulus
package will have been agreed."
A renewed focus on Fed easing could restrain the dollar,
after a wild ride overnight. The dollar index was last at 93.433
=USD , a lot nearer Wednesday's low of 93.070 than the top of
94.308.
Likewise, the dollar settled back to 104.30 yen JPY=
having briefly been as high as 105.32 overnight. The euro held
at $1.1726 EUR= , well away from a low of $1.1602.
Sterling had troubles of its own after the Telegraph
newspaper reported the BoE was considering a move into negative
interest rates. That left the pound flat at $1.2966 GBP= , compared with an
overnight peak of $1.3139.
All the talk of policy easing put a floor under gold prices,
leaving the metal a shade firmer at $1,907 an ounce.
Oil prices ran into some profit-taking. They had jumped
overnight on speculation a deadlocked U.S. government would be
unable to pass major environmental legislation that favoured
other forms of energy. O/R
U.S. crude CLc1 eased back 73 cents to $38.42 a barrel,
though that followed a rise of 4% on Wednesday, while Brent
crude LCOc1 futures fell 79 cents to $40.44.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Asia stock markets https://tmsnrt.rs/2zpUAr4
Asia-Pacific valuations https://tmsnrt.rs/2Dr2BQA
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>