Following the ongoing conclusion of the U.S. midterm elections, Asian shares mixed on Wednesday, 9th November 2022. Investors anticipate the results of the U.S. midterm elections and the announcement of the country’s inflation reports, scheduled for the same week.

China’s Inflation Data Display a Massive Decline

After the Cabinet ratified a 29.1 trillion yen ($190 billion) additional budget on Tuesday, 8th November, to support a projected economic inducement for the third-largest economy in the world, Tokyo’s Nikkei 225 index declined by 0.6%, pushing it down to 27,716.43.

Subsequently, the Chinese markets also saw a significant price drop following reports from the Chinese government that consumer price inflation has dropped from its initial 2.8% mark in September to 2.1% in October.

The producer price Inflation (PPI) entered the deflationary zone for the 21st consecutive month, falling to minus 1.3% from 0.9% in October. These numbers depict an even more unambiguous indication that the world’s second-largest economy is deteriorating.

The SPI Asset Management, Stephen Innes, commented that China’s current inflation data display an unfortunate outcome, with the PPI in a deflationary state and the CPI in a more vulnerable position than anticipated. He said that the inflation reports depict a shrinking demand which does not bode well for the country. 

Currently, the SSE Composite Index is down by 0.4%, pushing its price down to 3,052.48, while Hong Kong’s Hang Seng fell 1.5% to 16,307.72.

In addition, S&P/ASX 200 which is in Australia improved by 0.6% to 6,999.30, while the Kospi which is in Seoul gained 0.8% and rose up to 2,418.70.

Stocks Rally in Anticipation of a Republican House

While investors awaited the results of the midterms to determine their next steps in the future, Americans were placing votes with whispers of recession and reports of high inflation running rampant. 

Many analysts have placed bets under the prediction that the election results will announce Republicans as the victors and allow them to seize control of the House. 

On Wall Street, the Dow Jones Industrial Average (DJIA) surged 1%, pushing it to 33,160.83, while the Nasdaq composite rose 0.5%, pushing it up to 10,616.20. Finally, the S&P 500 surged by a modest 0.6% to 3,828.11 on Tuesday.

On the assumption that the Republicans win the midterms and take control of the House of Congress, the financial markets may fare well, significantly since stocks have surged in anticipation of the Republicans winning the elections. 

Alternatively, a Republican win may lead to less support from Congress when the recession arrives. Numerous economists are already predicting a significant slump in the coming months following Fed interest rate hikes intended to curtail inflation rates in the country.