Asian markets rose yesterday on signs US lawmakers are edging towards agreeing a new stimulus package for the struggling economy, while hopes for a vaccine helped temper worries about surging virus infections around the world.
After months of stuttering talks – and with a deadline approaching – Democrats and the White House said they were closing the gap on their proposals, with House Speaker Nancy Pelosi saying legislation was being drawn up.
The comments fanned optimism for a much-needed spending boost for Americans and US businesses, just as a fresh wave of coronavirus hits the country and threatens to trigger the reimposition of economically painful containment measures.
However, while Pelosi said she was hopeful a bill could be passed before the November 3 election, she warned it must go through legislative steps.
“I am optimistic,” she said, but “legislation is tough”.
The White House has upped its offer by $80bn to $1.88tn, which is still short of the Democrats’ $2.2tn plan, but Donald Trump has said he is willing to go even higher.
Senate Majority Leader Mitch McConnell – who has rejected massive spending packages – changed course and said he would bring the package to a vote if there is a bill Trump supports.
But he would still have to win round other fiscally conservative Republicans, which could prove a tough task.
“It’s very unlikely that a number of that level would make it through the Senate, and I don’t support something of that level,” Senator Mitt Romney told reporters, referring to the $1.8tn plan.
However, Axi strategist Stephen Innes said in a note: “Provided both parties are talking, if there is a will, there is a way as the political calculus allows for a pre-election deal.
After all, what politician wants to be painted as voting for unemployment.”
Markets remain upbeat even if nothing is passed before November 3, with traders broadly expecting a new package to be passed at some point, whoever wins the election.
And with Joe Biden well ahead in polls – while Democrats could possibly win both houses of Congress – there is speculation an even bigger deal could be pushed.
All three main Wall Street indexes ended well up, and most of Asia followed suit.
Hong Kong rose 0.8%, with local carrier Cathay Pacific jumping more than 2% after announcing it would make huge job cuts and shut down one of its airlines.
Tokyo rose 0.3% with Sydney, Singapore, Seoul and Taipei all in positive territory.
Mumbai jumped 1% and Manila rallied 2.7% as strict curfew measures were eased in the Philippine capital.
But Shanghai dipped after recent gains, while there were also losses in Wellington and Jakarta.
London, Paris and Frankfurt all fell in early trade.
Vaccine hopes were given a lift after Moderna said its jab could be given approval for emergency use as early as December, while a report said AstraZeneca is expected to be allowed to restart trials in the US after being suspended worldwide in September when a volunteer fell ill.
The firm has already revived tests in Britain and elsewhere after being given permission.
The news comes as the disease sees frightening new flare-ups across the United States and in Europe, where numerous countries have been forced to introduce targeted lockdowns that have fanned fears for business survival and warnings of a possible double-dip recession.
In Tokyo, the Nikkei 225 closed up 0.3% to 23,639.46 points; Hong Kong – Hang Seng ended up 0.8% to 24,754.42 points and Shanghai – Composite closed down 0.1% to 3,325.01 points yesterday.
An external view of the Tokyo Stock Exchange. The Nikkei 225 closed up 0.3% to 23,639.46 points yesterday.
