Asian Stocks Fall to 3-Month Low as Election Risk Grips Markets

(Bloomberg) -- Asian stocks outside Japan dropped toward a three-month low amid prospects for higher U.S. borrowing costs next month and mounting concern over the tightening U.S. presidential race.

The MSCI Asia Pacific excluding Japan Index fell 0.2 percent to 437.66 at 4:10 p.m. in Hong Kong, led by technology and utility shares. U.S. equity index futures slid as a Fox News report that a Federal Bureau of Investigation probe into the Clinton Foundation has taken on a very high priority fueled anxiety among investors as they remain on edge before next week's election. The Federal Reserve left interest rates unchanged and kept the option open for a hike by year-end. Japan's markets were shut for a holiday.

“There's a nervousness about the Fed raising interest rates and jitters ahead of an election that is too close to call,” Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which oversees about $121 billion, said by phone. “It's all about election risk now. If anything, the Fed has strengthened its confidence in a rate hike next month and that's weighed on investor confidence.”

Democratic contender Hillary Clinton has seen her odds of a victory falter after the FBI reopened a probe into an unauthorized e-mail server. A Bloomberg poll on Wednesday showed Clinton holding a slim advantage over Republican nominee Donald Trump among independents, with almost half voters in that bloc saying renewed scrutiny of her e-mails won't impact their decision.

Traders boosted wagers on a U.S. rate increase next month to 78 percent after Fed Chair Janet Yellen said the U.S. central bank only needed “some” further evidence that inflation and employment were on track toward their goals to lift the rate.

Australia's S&P/ASX 200 Index slipped 0.1 percent, while New Zealand's S&P/NZX 50 Index declined 1.1 percent, with the gauge falling more than 10 percent from this year's peak in September. South Korea's Kospi index rebounded from a July low to end a four-day slump.

Falling Earnings

Hong Kong's Hang Seng Index dropped to an August low as falling earnings at Hong Kong Exchanges & Clearing Ltd. and Wynn Macau Ltd. added to unease ahead of the U.S. elections. The Macau unit of Wynn Resorts Ltd. slumped 4.7 percent in Hong Kong trading after posting third-quarter profit that missed analysts' estimates.

The Shanghai Composite Index rose 0.8 percent. Alibaba Group Holding Ltd., the country's largest operator of internet shopping malls, showed once again that a slowing Chinese economy isn't holding it back, posting sales and earnings that beat analyst estimates.

The Philippine Stock Exchange Index sank 1.3 percent, its ninth day of declines and the longest stretch of losses since November 2015. The gauge entered a correction Wednesday after falling more than 10 percent from a July peak. Overseas investors sold a net $38.8 million of shares Thursday, a seventh straight day of outflows.

The Jakarta Composite Index dropped 1 percent, its third day of losses, while Taiwan's Taiex index fell 0.8 percent to the lowest level since Sept. 14.

Australia & New Zealand Banking Group Ltd. climbed 0.6 percent in Sydney and was one of the biggest supports to the Asian gauge that excludes Japan. The company said it is exploring the possible sale of life insurance, advice and superannuation and investments businesses in Australia, as part of a restructuring.

To contact the reporter on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net. To contact the editors responsible for this story: Jeff Sutherland at jsutherlan13@bloomberg.net, Chan Tien Hin, Ravil Shirodkar