By Stella Qiu

Market Overview

Asian shares fell on Thursday as the dollar remained near three-month highs. U.S. yields rose amid uncertainty about the election outcome, although Tesla's earnings provided some investor comfort.

Key Factors Affecting Markets

Higher U.S. Treasury yields, election uncertainty, and expectations of a more restrained Federal Reserve limited risk sentiment. Concerns about a possible return of Donald Trump to the White House added to market nerves.

Tesla's Strong Performance

Tesla shares surged 12% in after-hours trading following robust third-quarter profits and an unexpected sales growth forecast of 20-30% for next year.

U.S. Futures

Nasdaq futures increased by 0.5%, while S&P 500 futures rose by 0.2%. U.S. stocks had fallen for three consecutive days, notably among the Magnificent Seven tech stocks, with Nvidia dropping nearly 3%.

Asian Markets

In Asia, Tokyo's Nikkei index rose by 0.2%, while MSCI's index of Asia-Pacific shares outside Japan fell by 0.3%, influenced by declines in Chinese shares. Hong Kong's Hang Seng index dropped by 1.3%, and China’s blue-chip stocks fell by 0.8%.

Analyst Insights

Kyle Rodda, a senior analyst at Capital.com, noted that while fundamentals remain solid, short-term event risks are impacting asset prices, prompting traders to take profits and move to cash.

U.S. Bond Yields

U.S. bond yields continue to rise, with the 10-year Treasury yield up by 16 basis points this week to 4.23%, close to its three-month high of 4.260%. While yields were steady in early Asian trade, regional bonds fell, with Australian 10-year bond futures down for the third day.

Fed Rate Cuts

PIMCO economist Tiffany Wilding warned against placing too much emphasis on the recent increases in bond yields. Historical patterns suggest that the change in the 10-year yields after the Fed's first rate cut does not consistently signal further cuts.

Economic Data Impact

Strong economic data have led traders to question the Fed's ability to cut rates significantly at its remaining meetings this year, with swaps indicating just 40 basis points of easing.

Dollar and Commodities

The dollar remains supported near its three-month high, having surged 1.1% against the yen, which weakened after the Bank of Japan Governor highlighted delays in achieving inflation goals. Meanwhile, gold prices fell over 1% from a record high but rose slightly on Thursday, and oil prices increased by 1% to $75.72 per barrel, recovering some losses from a build in U.S. crude stocks.