European equities slip as Americans head to polls

LONDON: Europe’s stock markets slid Tuesday on trepidation over US midterm elections widely seen as a referendum on Donald Trump’s presidency, dealers said.

In late morning European deals, Frankfurt dipped 0.2 percent, London slid 0.5 percent and Paris lost 0.3 percent in value. Asian indices mostly ended higher.

As voting began in the midterm congressional poll at 1100 GMT, the dollar steadied mostly against rival currencies.

“Americans will cast their crucial votes in today’s mid-term elections, which for many will be a referendum on Trump’s presidency,” noted Rabobank analyst Jane Foley.

Most analysts expect the Democrats would win the House of Representatives, while the Republican party would hold onto control of the Senate.

– ‘Wait-and-see mode’ –

“It’s not a surprise to see a mixed picture across global equity markets overnight as investors are very much in a ‘wait-and-see mode’ ahead of today’s US midterm elections,” noted Oanda analyst Dean Popplewell.

“The latest polls suggest the Democrats have a good chance of winning the House and the Republicans have a good chance of retaining the Senate.

“But, if the Republicans surprisingly hold Congress, the dollar, stocks and Treasury yields would get a lift on the promise of Trump-onomics 2.0.”

As polling stations opened at 6:00 am on the East Coast, Republicans were keenly aware that losing their majority will hamstring his divisive, nativist political agenda over the next two years.

At stake are all 435 seats in the House of Representatives, 35 seats in the 100-member Senate, 36 governor’s posts and seats in state legislatures across the country.

For almost two years, Trump’s sometimes chaotic administration has enjoyed a largely free hand from the twin Republican-controlled chambers, but the midterms could finally see his wings clipped.

However, the booming economy traditionally favours the incumbent at this stage of a first-term presidency.

New figures on the eve of the polls confirmed that job growth is soaring and Trump gives himself credit for the “hottest economy on Earth.”

– ‘Wary eye’ –

“Businesses are keeping a wary eye on the developments as a number of Trump’s policies, including massive tax cuts, had fuelled a nearly 30-percent rally in the stock market this year,” noted City Index analyst Fiona Cincotta.

Tuesday represents the first major electoral test for Trump since he took the White House two years ago and embarked on an “America First” agenda that has split opinion across the country and globally.

While his tax cuts and deregulation have helped fire the economy and push stock markets to multiple record highs earlier this year, there is a growing concern that his long-running trade row with China is beginning to bite.

The vote has the added twist of an investigation that is looking at whether his campaign colluded with Moscow to win the 2016 election. If the Democrats win both houses of congress, they could push harder for impeachment, fuelling uncertainty.

In Asia, shares in Apple suppliers suffered on reports the tech titan had cancelled plans to ramp up output of its new iPhone.

A report in Japan’s respected Nikkei business daily said Apple had told Taiwan’s Foxconn and Pegatron to scrap planned new production lines for the iPhone XR.

– Key figures around 1130 GMT –

London – FTSE 100: DOWN 0.5 percent at 7,070.86 points

Frankfurt – DAX 30: DOWN 0.2 percent at 11,471.46

Paris – CAC 40: DOWN 0.3 percent at 5,087.79

EURO STOXX 50: DOWN 0.4 percent at 3,206.27

Tokyo – Nikkei 225: UP 1.1 percent at 22,147.75 (close)

Hong Kong – Hang Seng: UP 0.7 percent at 26,120.96 (close)

Shanghai – Composite: DOWN 0.2 percent at 2,659.36 (close)

New York – Dow: UP 0.8 percent at 25,461.70 (close)

Euro/dollar: DOWN at $1.1405 from $1.1407 at 2100 GMT on Monday

Pound/dollar: UP at $1.3059 from $1.3041

Dollar/yen: DOWN at 113.18 yen from 113.19 yen