Global stock prices slipped and US bond yields rose on Wednesday as investors braced for the prospect that Democrats could win both races in a US Senate run-off election in Georgia, handing them control of the crucial chamber.

Along with their narrow majority in the House of Representatives, a 'blue sweep' of Congress could usher in larger fiscal stimulus and pave the way for President-elect Joe Biden to push through greater corporate regulation and higher taxes.

Democrat candidates took early leads in the twin Georgia Senate races, though the outcome may remain in doubt for days if the margins are razor-thin.

"Having control over both the legislative and executive branches could theoretically lead to sweeping changes to policy," said Vasu Menon, investment strategy executive director at OCBC Bank.

"With Biden proposing to reverse President Donald Trump's tax cut, increase the minimum wage, and strengthen oversight on various industries, some might argue that his agenda is not particularly market-friendly."

Futures for the S&P 500 fell 0.43 per cent, while Nasdaq futures shed 0.7 per cent on fears Democrats could pursue tighter regulations on big tech firms.

Other industries, such as banks, oil and gas and healthcare, could come under heavier scrutiny, while infrastructure and alternative energy sectors could benefit.

Japan's Nikkei fell 0.4 per cent while MSCI's index of Asian-Pacific excluding Japan erased earlier gains to stand almost flat.

The 10-year US Treasuries yield rose to as high as 0.987 per cent, the highest level since March, on expectations of larger government borrowing.

"A market pull-back seems both reasonable and healthy. But stocks won't plunge to zero because there is a countervailing positive here," said Phil Orlando, Chief Equity Market Strategist, Federated Hermes of a potential Democratic sweep.

"A Biden honeymoon with Democratic Congress helmed by Nancy Pelosi and Charles Schumer would likely lead to more fiscal stimulus and infrastructure spending. That would serve as a temporary sugar high for stocks in 2021 before the bill comes due in 2022."

Uncertainty over delisting of Chinese firms

Adding to broader uncertainty in markets was the latest twist in a regulatory saga over whether the New York Stock Exchange would delist three Chinese telecom giants on security grounds.

Shanghai stocks extended gains on Wednesday, with the CSI300 index rising 0.5 per cent to reach its best levels since 2008.

Oil prices held firm, maintaining their gains of nearly 5 per cent made on Tuesday after Saudi Arabia offered to make voluntary cuts to its oil output.

Tensions following OPEC member Iran's seizure of a South Korean vessel also frayed nerves, adding further support to the market.

Tehran denied on Tuesday it was using the ship and its crew as hostages, a day after it seized the tanker in the Gulf while pressing a demand for Seoul to release $7 billion in funds frozen under US sanctions.

US crude futures were almost flat at $49.95 a barrel after having climbed 4.9 per cent on Tuesday.

International benchmark Brent crude futures stood firm at $53.45 after a gain of 4.9 per cent on Tuesday.

In currencies, the US dollar hit a new low before bouncing back on the prospects of the 'blue sweep' in Georgia.

The euro rose to as high as $1.2328, a high last seen in April 2018, while the yen hit a 10-month high of 102.595 to the dollar.

Spot gold held firm at $1,948.20 an ounce, having touched a two-month high earlier in the day.

Bitcoin traded at $33,904, near record high of$34,800 set on Sunday.

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