WPLCD Woodside Petroleum Ltd

Asian equity markets were mostly flat early Tuesday ahead of the U.S. presidential election, as investors remained cautious over the close race between Hillary Clinton and Donald Trump.

Some investors have said that a win by Mrs. Clinton could leave markets relatively calm, with investors generally preferring the Democratic nominee because of her perceived predictability on economic policies. However, her lead in the polls have been narrowing.

"I think we have seen all of the upsides from Sunday's news," said Alex Furber, a sales trader at CMC Markets, referring to the decision by the Federal Bureau of Investigation not to pursue charges against Mrs. Clinton on her use of a private email server.

Mr. Furber expects a broad-based selloff in markets and a shift from risky assets if Mr. Trump wins the election.

Stocks in Asia initially opened higher to track Wall Street's overnight strength, but several key markets soon reversed into negative territory. Japan's Nikkei Stock Average gave up earlier gains of 0.3% and was last down 0.2%, while Australia's S&P/ASX 200 fell 0.1% and Korea's Kospi was flat.

In the U.S., by contrast, the S&P 500 on Monday made its biggest gain since March, closing 2.2% higher and the Dow Jones Industrial Average gained 2.1%.

The Nikkei fell Tuesday despite a 0.1% gain in the U.S. dollar against the Japanese yen. A weaker yen makes Japanese exports more competitive and improves corporate profitability.

Shares of life insurers and banks benefited from higher, long-term government bond yields in the U.S. and Japan. Dai-ichi Life Holdings was up 1.3%, while T&D Holdings rose 1.9%, Sumitomo Mitsui Financial Group gained 0.6% and Nomura added 0.4%.

Prices for Brent crude, the international oil benchmark, rose on reports that Russia signaled it would take part in a deal with members of the Organization of the Petroleum Exporting Countries to cut production. Brent was last up 0.2% at $46.25 a barrel in morning Asian trade, though Nymex futures were flat.

Commodity prices also rose amid increased hopes of a victory for Mrs. Clinton. In Australia, BHP Billiton rose 2.6% and Rio Tinto added 1.7%. Woodside Petroleum and Oil Search were up by 1.2% and 1.4%, respectively, following gains in crude oil prices.

Stocks in Greater China were higher, though the markets have been stuck in range-bound trade for several sessions. Hong Kong's Hang Seng Index was up 0.3% and the Shanghai Composite Index added 0.2%.

Tuesday's equity market performance in Asia contrasted with Monday's strong buying momentum, though the gains in the previous session were mainly due to traders covering their short positions, Chris Weston, chief market strategist at broker IG, said.

"Clients are overwhelmingly asking how much can you trust the polls" for the U.S. election, he said. "Everyone has been burned before," he said, referring to the shock outcome of the Brexit vote in June.

Kosaku Narioka and Jenny Hsu contributed to this article.

Write to Kenan Machado at kenan.machado@wsj.com

(END) Dow Jones Newswires

November 07, 2016 23:05 ET (04:05 GMT)

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