SINGAPORE/HONG KONG - U.S. equity futures fell and safer assets like the yen and dollar found buyers on Wednesday after a chaotic first U.S. presidential debate turned investors cautious, though strong factory surveys gave a boost to Chinese shares.
President Donald Trump and Democratic rival Joe Biden sparred over Trump's leadership on the coronavirus pandemic, the economy and the integrity of November's election in exchanges marked by Trump's repeated interruptions.
U.S. stock futures ground higher in Asian time during the debate but then retreated after Trump cast doubt on whether he would accept the election's outcome.
S&P 500 futures were last 0.6% lower, with Dow Jones and Nasdaq 100 futures down by as much as 1%.
European markets looked set to follow, with FTSE futures falling 0.4% and Euro STOXX 50 futures down 0.6%.
The U.S. dollar crept higher and is set for its best monthly gain since July 2019, while the yen rose 0.2% to 105.50 per dollar, its strongest daily rise in nearly two weeks.
"The share market normally prefers the incumbent (president) to win," said Shane Oliver, head of investment strategy at AMP Capital in Sydney. "U.S. futures initially rose, as perhaps Trump delivered some punches, but it wasn't enough," he said.
"Investors have gone back to worrying about a contested election, a delay in the outcome and whether Trump will go peacefully if he loses."
Markets in Asia, most of which are headed for their worst month since March, either deepened losses or pulled back from highs made after data showed China's economic recovery remains on track.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.2%, led by a 1.2% gain in Hong Kong. Japan's Nikkei fell 1% and Australia's S&P/ASX 200 fell nearly 2%.
Chinese property developers gained, led by a 15% jump in Evergrande shares after the heavily-indebted giant reached a deal to ease cash crunch concerns.
China's factory activity expanded at a faster pace in September, helped by rising export orders.
The official manufacturing Purchasing Manager's Index (PMI) rose to 51.5 in September from 51.0 in August. Analysts had expected it to pick up slightly to 51.2.
The presidential debate yielded no clear winner and barely moved the needle in betting markets, which project a narrow Biden victory. Odds maker Smarkets slightly lowered Trump's chance of re-election to 40% after the debate, compared with 42% beforehand.
But as the election draws closer, investors are increasingly expecting a bumpy final lap and are bracing for the possibility that the result is unclear on polling day.
Options trade points to a volatile November. Two-month dollar/yen volatility, a gauge of expected moves in the yen, is elevated, and its premium over one-month volatility is near record levels.
On Wednesday major currencies slipped a tad on the dollar after the debate, knocking the euro from a one-week high to $1.1736. The risk-sensitive Australian dollar fell 0.2% to $0.7118 and is headed for its worst month since March.
Biden said in the closing stages of the debate that he would accept defeat if he lost at the ballot box and would not claim victory prematurely.
Trump, who has refused to commit to a peaceful transfer of power if he loses the election, repeated unfounded allegations that mail-in voting would lead to fraud.
"I don't think we were expecting anything else from Trump," said Chris Weston, head of research at Melbourne brokerage Pepperstone. "He continues to put that contested (result) risk premium back into the market."
Elsewhere, oil prices fell amid rising concerns about fuel demand as the coronavirus pandemic worsens.
Brent crude futures were last down 0.9% at $40.66 a barrel and U.S. crude futures were down 0.7% at $39.00 a barrel. Gold slipped 0.4% to 1,890 an ounce.
(Reporting Tom Westbrook in Singapore and Scott Murdoch in Hong Kong. Additional reporting by Stanley White in Tokyo and Pete Schroeder in Washington.; Editing by Shri Navaratnam, Simon Cameron-Moore and Kim Coghill)