The US goes to the polls in the first major electoral test for Trump since he took the White House and embarked on an “America First” agenda that has split opinion across the country and globally.
While his tax cuts and deregulation have helped fire the economy and push stock markets to multiple record highs earlier this year, there is a growing concern that his long-running trade row with China is beginning to bite.
The vote has the added twist of an investigation that is looking at whether his campaign colluded with Moscow to win the 2016 election. If the Democrats win both houses of congress, they could push harder for impeachment, fuelling uncertainty.
“These midterm elections carry a sizeable legal risk for the (Republicans) which could dent investor confidence as we will likely hear much more from (Russia probe lead counsel) Robert Mueller sooner rather than later,” said Stephen Innes, head of Asia-Pacific trade at OANDA.
Hong Kong edged up 0.2% in the afternoon, having lost more than 2% on Monday, while Tokyo was up more than 1% thanks to a weaker yen.
Sydney gained 1% and Seoul added 0.6%. Wellington rose 0.4% and Jakarta climbed 0.1%.
However, Shanghai ended down 0.2% and Taipei lost 0.7%.
China ‘ready’ for trade talks
Hopes that China and the US can resolve their tariff row were given a boost by comments from Chinese Vice President Wang Qishan that he felt the two sides would reach an agreement.
“Both China and the US would love to see greater trade and economic cooperation,” he told the Bloomberg New Economy Forum in Singapore.
“The Chinese side is ready to have discussions with the US on issues of mutual concern and work for a solution on trade acceptable to both sides.”
Technology firms were among the worst performers, with companies that supply Apple taking a hit after a report in Japan’s respected Nikkei business daily said it had told Taiwan’s Foxconn and Pegatron to scrap planned new production lines for the iPhone XR.
Pegatron fell 4.6% though Foxconn bounced back to rise 0.2% while other tech companies were being sold off.
Alps Electric in Tokyo sank 0.8%, Samsung dropped 0.1% in Seoul and AAC Technologies was almost 5% lower in Hong Kong.
Seoul-listed LG Display was 0.6% lower and Japan Display gave back 3.7%.
Firms linked to Apple were already under pressure after the US giant last week reported weaker-than-forecast iPhone sales and said it would no longer reveal how many it had shifted in its earnings.
Apple shares have fallen almost 10% since Thursday.
Past Tuesday’s elections, traders are looking at the Federal Reserve’s latest policy meeting, which is not expected to see another interest rate hike but will be followed for clues about its plans for future moves.
Expectations for more rises has pushed the dollar higher against its peers, though the pound is enjoying some buying as hopes grow that officials are close to an agreement on a post Brexit-deal for Britain.
Key figures around 0710 GMT
Tokyo – Nikkei 225: UP 1.1% at 22,147.75 (close)
Hong Kong – Hang Seng: UP 0.2% at 25,972.64
Shanghai – Composite: DOWN 0.2% at 2,659.36 (close)
Euro/dollar: UP at $1.1413 from $1.1407 at 2130 GMT
Pound/dollar: UP at $1.3059 from $1.3045
Dollar/yen: UP at 113.42 yen from 113.20 yen
Oil – West Texas Intermediate: DOWN 30 cents at US$62.80 per barrel
Oil – Brent Crude: DOWN 52 cents at US$72.65 per barrel
New York – Dow: UP 0.8% at 25,461.70 (close)
London – FTSE 100: UP 0.1% at 7,103.84 (close)