Hong Kong and Mainland Stocks Rise as US Congress Democratic Sweep Dampens Fiscal Stimulus Outlook

Stock markets in Asia climbed on Wednesday as investors weighed the impact of a Democratic sweep of the U.S. Congress, which is expected to curb the Trump administration’s economic agenda. The Hang Seng Index advanced 393 points, or 1.67 percent, to 23,919, marking a fourth straight day of gains. Mainland shares also rose, with the Shanghai Composite up 2.16 percent to 3,686 and the Shenzhen Component surging 4.22 percent to 11,335. In contrast, Japan’s Nikkei fell 1.42 percent to 62,188, dragged down by technology stocks, while South Korea’s Kospi edged up 0.62 percent to 5,683. The prospect of a congressional stalemate weighed on the U.S. dollar and Treasury yields, as analysts noted that Democratic control will make it harder for the White House to pass major partisan legislation, potentially reducing the likelihood of significant fiscal stimulus over the next two years. For Asian markets, a slowdown in U.S. fiscal stimulus could ease upward pressure on growth, inflation and Treasury yields, thereby easing some of the pressure that higher U.S. rates and a stronger dollar have placed on Asian currencies and monetary policy.