Oct 23 (Reuters) - U.S. stock futures dipped and the
Japanese yen ticked up on Friday after a final debate between
U.S. President Donald Trump and Democratic challenger Joe Biden
merely hardened investors' caution heading into the election.
U.S. S&P 500 E-minis were down 0.1% at 3,445.75
points at 0230 GMT. The S&P 500 index closed down 0.5% at
3,453.49 on Thursday.
The dollar was a few pips higher, while the
safe-haven yen was up 0.1% at 104.71 per dollar.
"It was a slightly more civilized debate this time around,
but Trump failed to make up for lost ground from the first
debate," said Vasu Menon, a senior strategist at OCBC Wealth
Management in Singapore.
"Biden came through better than Trump in this debate and
this should help to cement his lead over Trump and may just help
him to cross the final line with a win."
The final debate in Nashville, Tennessee on Thursday follows
over a week of choppy trade on Wall Street, with investors
worried about whether Congress and Trump will approve another
fiscal stimulus package before the election.
Gary Ng, Natixis economist for Asia in Hong Kong, pointed to
the slight strengthening in the U.S. dollar index as a sign that
sentiment has turned conservative because of the risk and
uncertainty around the election outcome.
Following a recent decline, the S&P 500 remains up over 3%
since the two candidates' first debate, on Sept. 29, with
investors voicing growing comfort with a potential Biden victory
as the Democratic candidate increased his lead in polls.
Many investors in recent months have held that a second term
for Trump, who favors tax cuts and deregulation, would be good
for the stock market.
The S&P 500 is up more than 60% since Trump's unexpected
election victory on Nov. 8, 2016, beating the 42% gain in the
first four years after Democratic President Barack Obama won in
Investors view Biden as likely to raise taxes, especially if
Democrats wrest control of the Senate from Republicans. However,
a Biden presidency, coupled with a Democratic Senate, would
likely mean a larger fiscal stimulus plan than what a Republican
Senate would agree to, many investors believe.
Goldman Sachs this month estimated that under a Biden
presidency, corporate earnings would receive a boost from fiscal
stimulus and lower tariffs, more than offsetting a drag caused
by an expected tax hike.
However, it is unclear how Wall Street would react to the
election outcome. In the run-up to the 2016 election, investors
widely predicted that a Trump victory would hurt stocks due to
his unpredictability and trade-war threats against China and
Following Trump's victory, the S&P 500 surged 5% in a month,
in what was dubbed the "Trump trade," as investors bet the
president would cut taxes and regulations and boost
With expectations that the increased use of mail-in ballots
by voters concerned about the coronavirus could mean no
immediate winner is announced, S&P 500 options show investors
are bracing for volatility in November and December.
With 12 days to go, some 47.5 million Americans have turned
in ballots, roughly eight times the number of early votes cast
at about same point before the 2016 presidential contest,
according to data compiled by the U.S. Elections Project.
Trump has declined to say if he will accept the results of
the election if he loses, repeating his unfounded complaint that
mail-in ballots would lead to election fraud.
(Reporting by Noel Randewich in San Francisco, Scott Murdoch in
Hong Kong, Tom Westbrook and Anshuman Daga in Singapore
Editing by Vidya Ranganathan and Sam Holmes)