Asian markets kicked off the trading week in turmoil, with political news from the region and the U.S. roiling stocks and currencies.
The Korean won fluctuated between gains and losses, and the benchmark Kospi Composite fell after thousands attended a protest against South Korean President Park Geun-hye on Saturday. Meanwhile, other Asian benchmarks weakened as investor confidence was hit by the latest twist in the U.S. presidential election.
Better-than-expected U.S. GDP data were eclipsed Friday as the Federal Bureau of Investigation said it would take a fresh look at Hillary Clinton's emails less than two weeks before the U.S. presidential election November 8, prompting sharp declines in stocks.
"Market sentiment soured after the FBI decided to reopen its investigation into Democratic presidential candidate Hillary Clinton's use of email," analysts from DBS wrote in a research note. "The market is wary of a Brexit-like outcome."
Macroeconomic data pointed to further malaise in some of Asia's biggest economies. Retail-sales data for September showed a sharp cooling of consumer sentiment in South Korea and sustained declines in sales in Japan.
The Korean won "is expected to remain susceptible to external and domestic uncertainties," Qi Gao, foreign-exchange strategist for emerging Asia at Scotiabank wrote in a research note.
He says he is bearish on the won compared with the Japanese yen, given Korea's sluggish growth outlook, U.S. and Korean political uncertainties, and the potential for protectionist trade policies if Donald Trump wins next week's election.
Japanese industrial production data for September also disappointed ahead of tomorrow's Bank of Japan meeting, with no change recorded month-on-month compared with estimates of a 1% increase.
But after a decrease in August, a flat print was enough to give hope to some economists.
"While today's retail-sales data suggest that private consumption may at best be flat in Q3, the industrial-production figures point to continued recovery," wrote Marcel Thieliant, senior Japan economist at Capital Economics. "Nonetheless, today's data will not deter the Bank of Japan from cutting rates tomorrow."
Political developments in Europe were also in focus. The British pound gained after the Financial Times reported that Bank of England Gov. Mark Carney would make a statement this week clarifying whether he would serve out a full eight-year term. He has told friends he intends tostay, the Financial Times reported.
Sterling, as the British currency is also known, rose to 1.2182 against the U.S. dollar but remains near the lowest levels since 1985, reached after the country voted to leave the European Union in June.
The pound has been fragile during the past few weeks as pro-Brexit politicians urged Prime Minister Theresa May to replace Mr. Carney. "Hope he's hedged his pay," one currency trader said.
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(END) Dow Jones Newswires
October 31, 2016 01:05 ET (05:05 GMT)
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