Asian stocks rose following election-day gains in the US, as traders hunkered down awaiting results in a presidential race pitting divergent visions of global trade and the economy.

Equities climbed in Japan and Australia, while S&P 500 futures edged up 0.2% to 5,825. Trading is expected to be volatile as election results come in, with polls showing Donald Trump in a virtual tie with Kamala Harris. Investors will be wary of sudden asset moves that reverse as quickly as they came. The Japanese yen is a good yardstick. While it was little changed on Wednesday, it experienced plenty of whiplash over the past two US election nights. The Mexican peso fell. Treasuries erased gains.

In other markets, Bitcoin held onto its biggest gain in a week. The original cryptocurrency was little changed under $70,000, less than 6% below its March record set during the euphoria that followed January’s launch of US spot-Bitcoin exchange-traded funds. Oil and gold fluctuated.

In widely expected results, Trump was declared the winner in Indiana and Kentucky while Harris took Vermont. Early results from Georgia, which narrowly voted for Democrats four years ago, could offer initial insight into how the two candidates are performing. Another key prize, North Carolina, ends voting at 7:30 p.m. local time.
While it’s anyone’s guess how long it will take to get clear results for both the presidency and the makeup of Congress, markets showed signs of last-minute positioning. Investors boosted bullish options positions in Treasuries, potentially paring back bets a Trump win would push up interest rates, while a volatility gauge tied to single-day options on the S&P 500 doubled on Tuesday. A handful of banks told clients their derivatives trading desks will be open as returns come in, according to people familiar with the matter.

In contrast to Tuesday’s relatively calm session, Wall Street saw the potential for outsized moves almost regardless of the election’s outcome.

Goldman Sachs Group Inc.’s trading desk said a Republican sweep may push the S&P 500 up by 3%, while a decline of the same size is possible should the Democrats win both the presidency and Congress. Moves would be half as much in the event of a divided government. Andrew Tyler at JPMorgan Securities said anything other than a Democratic sweep is likely to cause stocks to rise.

The call for a year-end rally has history on its side, as it tends to be a seasonally strong period for US stocks.

To Morgan Stanley’s Mike Wilson, the election could serve as a “clearing event” that kicks off a year-end rush into stocks. At JPMorgan Chase & Co., Dubravko Lakos-Bujas says the setup for equities looks solid through December once the presidential race is called. He expects confidence to grow and volatility to decrease, leading investors to unwind hedges and refocus on the Fed at a time when the economy and corporate earnings remain resilient, a combination that will drive further gains.

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