HONG KONG – Asian markets mostly rose today following more records in New York and Wall Street after Joe Biden finally signed his enormous stimulus into law, while fears over inflation and a possible interest rate hike subsided for now.
Less than two months after taking office, the new president yesterday put his name to the US$1.9 trillion (RM7.69 trillion) rescue plan that paves the way for a spending splurge that is widely seen as ramping up domestic and global growth.
While it has long been expected, the final passage of the bill provided a big lift to equity markets, which have been rattled in recent weeks by concerns that the forecast world economic recovery will fire inflation and force central banks to lift interest rates sooner than expected.
“The administration has slipped a little bit of extra fuel to the equity markets with their bill. It’s going to be rocket fuel,” said Chris Gaffney, at TIAA Bank.
ECB soothes rate worries
Wall Street welcomed the news with the Dow and S&P 500 ending at new records, while the Nasdaq, which has been battered by a sell-off in tech firms, piled on more than 2%.
Tokyo jumped 1.7%, while Shanghai, Seoul, Wellington and Jakarta also added more than 1% while Sydney, Taipei, Manila and Mumbai were also in positive territory.
“Global markets continued to revel in the afterglow of Biden pulling off one of the most significant legislative accomplishments of all time, that will undoubtedly help spur the global economy,” said Axi’s Stephen Innes.
Hong Kong fell deep into the red after recent gains as market heavyweight Tencent was hit by an anti-monopoly fine by China that fuelled fears it was next on the list of targets for mainland authorities looking to reel in the country’s tech giants. There were also losses in Singapore and Mumbai.
Investors were also spooked by reports that the Biden administration planned to tighten export restrictions on suppliers to Chinese tech giant Huawei, indicating the White House does not intend to soften its stance on Beijing despite Donald Trump’s exit.
The European Central Bank’s decision to ramp up its bond-buying programme provided some calm as it looked to soothe concerns that a recent jump in government bond yields across the world would lead to hikes in interest rates.
Observers said the ECB move signalled to investors that bank officials around the world were ready to step in to keep their monetary policies ultra-low for as long as needed to help the economy get back on track.
But OANDA’s Jeffrey Halley sounded a note of caution on inflation, saying “the inflation genie may have been put back into its bottle for the weekend, but someone is sure to pick it up and uncork it again soon”.
London opened lower after data showed the British economy shrank 2.9% in January. Paris and Frankfurt also dipped. – AFP, March 12, 2021
