Australia

Australian shares are set to edge lower following a dip on Wall Street as the results of the US mid-term elections continued to roll in.

ASX futures were down 49 points or 0.7% at 6948 as of 7:00am on Thursday, pointing to a slip at the open.

US stocks declined on Wednesday, putting major indexes on track to pause a three-day rally, as investors awaited midterm election results to see if Republicans would take control of one or both chambers of Congress.

As of 3:00 p.m. ET, the midterm election ballots were still being counted across the US, with several key races undecided as of early Wednesday. Republicans remain favored to take the House majority, but the makeup of the Senate remains a tossup. Some races may ultimately take days to be called.

Investors are monitoring the results to see if the election results in a divided US government, an outcome that would suggest few major policy changes in the next two years. That is typically seen as a boon for the stock market.

Though investors' expectations of a gridlocked government appear intact, results thus far suggest Republicans may not have gained as much ground as anticipated.

"Markets don't enjoy surprises, preferring predictability. This did not transpire to be the route expected," said Aoifinn Devitt, chief investment officer at investment adviser Moneta.

In commodity markets, Brent crude oil slid 2.93% to $US92.57 a barrel, gold edged down 0.5% to US$ 1,703.68.

In local bond markets, the yield on Australian 2 Year government bonds dropped to 3.29% while the 10 Year fell to 3.86%. Overseas, the yield on 2 Year US Treasury notes rose to 4.63% and the yield on the 10 Year US Treasury notes was up at 4.16%.

The Australian dollar hit 64.21 US cents down from the previous close of 65.05. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies edged up to 102.84.

Asia

Chinese stocks closed lower, ending a recent rally as investors reassessed the prospect of China loosening its strict pandemic rules. New infections in Beijing climbed to the highest level in over five months and new cases across the country also hit a multimonth high. Chip makers and liquor producers led losses. NAURA Technology Group dropped 3.4% and index heavyweight Kweichow Moutai fell 1.7%. The property sector was one of the few bright spots in the market. Gemdale Corp. rose 7.0% and Poly Developments & Holdings Group added 2.5%, after Beijing said it would help expand debt financing for private developers. The Shanghai Composite Index dropped 0.5% to 3048.17, the Shenzhen Composite Index fell 0.4% and the ChiNext Price Index was 1.4% lower.

Hong Kong stocks extended their downturn, as the market continued to pull back from a soaring start of the month. The benchmark Hang Seng Index fell 1.2% to settle at 16358.52. Chinese auto makers led losses, after the latest vehicle insurance sales data, a key industry metric that implies overall auto demand trends, missed expectations for the first week of November, while Tuesday's official data also showed a drop in national October auto retail sales. Geely Auto lost 6.0% and BYD was down 4.6%. Property developers offset some of the market's losses, after China signaled more policy and financing support. Country Garden soared 14% and Longfor rose 4.0%.

The Nikkei Stock Average closed 0.6% lower at 27716.43 after data showed that Japan's current account surplus declined in the first half of this fiscal year. Energy stocks were among the worst performers, with Cosmo Energy slipping 1.7%, Idemitsu Kosan dropping 2.7% and Nichireki declining 1.8%. Game developer Nintendo fell 7.1% after it lowered its FY forecast for Switch console sales amid chip shortages. Suzuki Motor gained 3.5% after it raised its FY earnings forecast, following stronger 1H earnings.

Europe

European stocks fall after largely downbeat trading in Asia. The pan-European Stoxx Europe 600, the French CAC 40 and German DAX retreated 0.5%, 0.4% and 0.6%, respectively.

"As the US mid-term election results slowly drift in, it looks like the Democrats are doing better than expected, holding onto some key Senate seats with President Joe Biden avoiding an embarrassing Republican sweep," Interactive Investor head of investment Victoria Scholar wrote.

In London, the FTSE 100 closed down 0.1% on Wednesday in a relatively flat performance overall when compared with greater falls seen in other markets. With midterm elections in the US still not providing investors a clear direction, and with the all-important US inflation reading still to come this week, most traders are opting for quiet, cautious optimism, said Chris Beauchamp, IG Group PLC's chief market analyst. "After the busy weeks of October and early November both the buyers and sellers are generally exhausted," Beauchamp said.

North America

US stocks declined Wednesday, putting major indexes on track to pause a three-day rally, as investors awaited midterm election results to see if Republicans would take control of one or both chambers of Congress.

Midterm election ballots are still being counted across the US, with several key races undecided as of early Wednesday. Republicans remain favored to take the House majority, but the makeup of the Senate remains a tossup. Some races may ultimately take days to be called.

Investors are monitoring the results to see if the election results in a divided US government, an outcome that would suggest few major policy changes in the next two years. That is typically seen as a boon for the stock market.

Though investors' expectations of a gridlocked government appear intact, results thus far suggest Republicans may not have gained as much ground as anticipated.

"Markets don't enjoy surprises, preferring predictability. This did not transpire to be the route expected," said Aoifinn Devitt, chief investment officer at investment adviser Moneta.

In general, history shows stocks tend to advance after midterms. The S&P 500 has risen in the trading session following Election Day roughly three-quarters of the time since 1930, with an average gain of 0.4%, according to Dow Jones Market Data. The broad benchmark has moved higher in the one-year period following every midterm election since 1942.

Even so, many still say their focus is largely elsewhere this year as the Federal Reserve raises interest rates at an aggressive pace in an effort to tamp down persistent inflation.

"At the end of the day, it's still all about the Fed," said Leslie Thompson, chief investment officer at Spectrum Wealth Management. Ms. Thompson said her firm is positioned defensively and holding more cash than usual as it monitors the Fed's monetary policy trajectory

Thursday will bring new inflation data from October, which is expected to factor heavily into the Fed's next interest-rate decision. Economists expect consumer prices rose 7.9% on an annual basis, down from 8.2% the previous month.

Investors are roughly split on their expectations for the outcome of the central bank's December meeting. Federal-fund futures, used by traders to wager on the trajectory of interest rates, on Wednesday showed a 52% chance that the Fed will raise rates by a smaller 0.5 percentage point, versus a 48% chance that it will lift rates by 0.75 percentage point for a fifth time in a row.

Investors are also on high alert for any possible contagion from a selloff in cryptocurrencies, which came after crypto exchange FTX succumbed Tuesday to a sudden liquidity crunch and agreed to be taken over by rival Binance. Bitcoin fell roughly 11% from its 5 p.m. ET Tuesday price to trade at $16,568. Ethereum fell around 14% from its 5 p.m. ET price.

Meanwhile, FTX's FTT token continued its sharp tumble. It has lost roughly 63% in the past 24 hours, CoinDesk data show, as the fallout from its liquidity crisis grows.

Stocks with ties to cryptocurrencies also slid. Cryptocurrency exchange competitor Coinbase Global shares fell 10%. Robinhood Markets declined 12%. Earlier this year, Sam Bankman-Fried, the founder of FTX, unveiled a roughly $648 million investment in Robinhood in exchange for 7.6% of the company's Class A shares. He said in an interview earlier this year that FTX was open to partnerships with Robinhood.

The liquidity issues at FTX and the shockwaves in the crypto world "could certainly be impacting risk appetite" among investors Wednesday, said Ross Mayfield, investment strategy analyst at Baird. "It keeps investors on edge of what else could be lurking out there, especially if the Fed intends to continue tightening at the current pace."

Elsewhere, Meta Platforms jumped 6.1% after it said it would cut more than 11,000 workers, or 13%, of staff. Walt Disney shares dropped 13% after reporting weaker-than-expected quarterly results, the biggest laggard in the Dow industrials.