Asian stocks mixed as caution reigns ahead of U.S. midterms By Reuters

By Kane Wu

HONG KONG (Reuters) - Asian shares held recent gains but Global dealer supervision query foreign exchange eyelost momentum on Tuesday as investors remained cautious ahead of the release of the U.S. inflation data and mid-term elections, which will determine control of Congress.

London and New York are set to open lower with futures and E-mini futures for the down 0.55% and 0.18%, respectively, after Wall Street's buoyant Monday close.

MSCI's gauge of Asia Pacific stocks outside Japan narrowed gains to rise 0.12% at 0517GMT.

"The thing to watch ... will be the U.S. midterms today and the CPI data tomorrow," said Redmond Wong, Saxo Markets' market strategist for Greater China, in a note on Tuesday.

"Markets are expecting the gridlock situation of a divided Congress and moderation in the U.S. CPI. Both are helping the risk-on sentiments."

Investors had recently placed bets on hopes that China would adjust its zero-COVID policy and reopen the economy soon but that rally proved unsustainable.

Hong Kong's and China's benchmark CSI300 Index both dropped 1% in the afternoon sessions, wiping out morning gains.

Chinese health officials reiterated their commitment to the zero-COVID policy on Saturday at a press conference.

The policy has weighed on China's economic activity, with downbeat trade data on Monday providing the latest sign that the world's second-largest economy is slowing.

"Investors took note (of the fact) that the health officials added that local governments should not unreasonably double down on the implementation and must ensure people’s livelihood and economic activities remain normal," Wong added.

Australia's ended the day 0.36% higher, lifted by financial companies.

225 gained as much as 1.44%, hitting an eight-week high, as investors scooped up chips and other technology stocks.

Overnight, the rose 1.31%, the S&P 500 gained 0.96% and the advanced 0.85%.

Analysts said U.S. mid-term elections on Tuesday could impact markets.

Control of the U.S. House of Representatives is at stake in the midterms, with Republicans favoured by nonpartisan forecasters to win control.

"A divided government in Washington is ostensibly bullish for equities," said Stephen Innes, managing partner of SPI Asset Management in a note.

"Gridlock cross-checks each party's 'worst impulses,' and less activist fiscal policy is conducive to lower market volatility. That could be particularly helpful in 2022 and 2023 to the extent it calms rates volatility, the principal sponsor of this year's historic cross-asset malaise," he said.

Oil prices fell as recession concerns and worsening COVID-19 outbreaks in China sparked fears of lower fuel demand, outweighing supply worries.

fell 0.32% to $97.61 a barrel by 0526 GMT, while fell 0.38% to $91.44 a barrel.

slipped 0.31% to $1,669.4 an ounce as the U.S. dollar gained 0.163%.

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