AFP/ Hong Kong
Asian markets fell yesterday as investors took a breather following a strong week for global equities as Joe Biden took up residence in the White House, though there were concerns about the outlook for his new stimulus proposal.
The new president spent his first full day firing out a series of executive orders to kickstart the government’s battle against Covid-19 as he looks to get the world’s top economy back on its feet, including ramping up its vaccination programme.
But he warned that the country would probably record its 500,000th death next month as the disease surges, though there was some optimism as infections appeared to be plateauing.
Top infectious disease adviser Anthony Fauci said the president’s goal of distributing 100mn doses of vaccine within his first 100 days was “absolutely” achievable.
The virus continues to be the main stumbling block for markets, playing off against long-term optimism that the planet will eventually return to normal as more people get a jab.
Biden’s $1.9tn rescue plan has been a key driver for buying in recent weeks, though there is a fear it could be watered down by growing opposition among Republicans – and some Democrats – to such a big spending spree just a month after a $900bn package was passed.
But most observers were confident Congress would eventually deliver more help.
Biden’s pick for treasury secretary, Janet Yellen, this week told senators to “go big” if they want to see a quicker recovery.
“Day two for the Biden administration delivered no surprises, with the focus shifting to the debate over his $1.9tn Covid relief plan,” said OANDA’s Edward Moya. “The next couple weeks will be filled with political posturing but expectations are high that at least $1tn worth of support will get approved.”
Asia was in the red, with Hong Kong down more than 1% on profit-taking after cracking 30,000 points Thursday for the first time since April 2019, though analysts say a flood of cash from mainland Chinese traders should buoy the market for some time to come.
Tokyo, Shanghai, Sydney, Seoul, Singapore, Taipei and Manila also fell, though there were gains in Wellington. Tokyo’s Nikkei 225 closed 0.4% down at 28,631.45 points, Hong Kong’s Hang Seng ended 1.6% down at 29,447.85 points and Shanghai’s Composite lost 0.4% to close at 3,606.75 points.
London, Paris and Frankfurt all opened lower.
The losses came despite a broadly positive lead from Wall Street, where the Nasdaq fired to another record along with the S&P 500, though the Dow inched slightly lower.
The US rises were helped by a series of upbeat economic readings, including a surge in Philadelphia-Delaware-New Jersey manufacturing to its highest level since early in the pandemic, below-forecast jobless claims and better-than-expected housing starts.
And the outlook among observers remains one of positivity for world markets.
National Australia Bank’s Ray Attrill said traders were a long way from worrying about the possible negative aspects of Biden’s presidency, such as tax hikes and re-regulation.
“Doubtless that will come at some point,” he said, “but for now the prospect of stronger fiscal support for the economy and the evident determination of the new administration to get to the other side of the pandemic as quickly as possible, together with incoming fourth-quarter earnings results, looks to be carrying the day.”
And Janus Henderson Investors’ Paul O’Connor added: “While the recent rally clearly suggests that some of this recovery is already priced in, we see plenty of scope for investment flows to rotate from cash and other assets toward equities, once the recovery becomes more visible.”
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