HONG KONG – Asian markets were mixed today as investors kept an eye on United States stimulus progress and the rollout of vaccines, while the pound was holding around 19-month highs on Brexit optimism, though surging infections and new lockdowns were keeping the mood subdued.
Lawmakers on both sides said they were hopeful of passing a much-needed rescue package for the troubled US economy as they haggle over details of a bipartisan proposal that appears to have broken months of deadlock.
With the two most contentious items removed from the plan, which is said to amount to around US$900 billion (RM3.6 trillion), Republican Senate Majority Leader Mitch McConnell said leaders “made major headway toward hammering out a targeted pandemic relief package that would be able to pass both chambers with bipartisan majorities”.
He added that they had “agreed that we will not leave town until we’ve made law”, while top Senate Democrat Chuck Schumer said: “It’s not a done deal yet, but we are very close.”
OANDA analyst Craig Erlam said there is chatter about a possible vote on Capitol Hill at the weekend.
Wall Street ended broadly higher with Nasdaq chalking up another record, but Asia struggled to gain traction with hopes for a new stimulus offset by the imposition of strict containment measures around the world as coronavirus infection and death rates spike.
Tokyo and Hong Kong were flat, while Shanghai edged up slightly and Wellington rallied on data showing New Zealand’s economy grew more than expected in the third quarter. There were also gains in Sydney and Jakarta, but Seoul, Taipei, Singapore and Manila all slipped.
As the stimulus talks continued, the Federal Reserve held its final policy meeting of the year at which it gave an upbeat assessment of the outlook for the world’s top economy next year and pledged to maintain its huge bond-buying, monetary-easing programme until it is back on an even keel.
But bank chief Jerome Powell reiterated the need for US lawmakers to reach a stimulus agreement, saying: “The case for fiscal policy right now is very strong. I think that is widely understood.”
Powell’s ‘realism’
Stephen Innes at Axi said: “The big takeaway from the... meeting was the acknowledgement monetary policy can only have a limited influence on inflation now. Right now, fiscal policy is the most powerful economic tool.”
He said Powell “kept coming back to the need for fiscal policy to provide the base layer of support to the economy. That did not mean it was a highly political affair from Powell – it was not. Rather he gave a press conference full of realism and acceptance of what the Fed could and could not do”.
Talks across the Atlantic on a post-Brexit trade deal also appeared to be heading in the right direction, with European Commission President Ursula von der Leyen saying “the next days are going to be decisive”.
The pound was sitting around levels last since in May 2018, though it was struggling to break higher as Britain and EU negotiators remain unable to find common ground on fishing rights.
And British Prime Minister Boris Johnson said: “There's every opportunity, every hope that I have that our friends and partners across the Channel will see sense and do a deal.”
Bitcoin extended gains after breaking to a fresh record above US$21,000 yesterday. The unit, which was wallowing around US$5,000 in March, has soldiered higher since online payments giant PayPal said it will enable account-holders to use cryptocurrency.
While markets are stuttering this month heading into the Christmas break, Brian Nick at Nuveen sounded a note of optimism.
“The 12-month outlook looks quite a bit better because we have high conviction now that there is going to be mass vaccination," he said.
“There’s not going to be as acute of a health crisis as we’re experiencing right now.” – AFP, December 17, 2020
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