HONG KONG – Asian markets rose again today, putting them on course to end an upbeat week on a healthy note, with traders welcoming another forecast-beating reading on US jobless claims that reinforced optimism about the recovery in the world’s top economy.
There was also some cheer from reports that Joe Biden is planning a US$6 trillion (RM24.8 trillion) budget proposal for later in the day that includes his vast infrastructure deal and spending on families.
And, while the huge outlays are likely to add to inflationary pressures, investors were happier to look past that, opting instead to focus on the economic boost, while Federal Reserve officials as well as Treasury Secretary Janet Yellen continue to argue that any price spikes will be transitory.
Regional equities have enjoyed a broadly positive week as inflation fears and rising virus cases take a back seat to the reflation narrative fuelled by the roll-out of vaccines and reopening of economies.
And yesterday, the Labour Department said 406,000 new seasonally adjusted claims for jobless benefits were made last week, 38,000 down on the week before, much better than predicted and a pandemic low.
US media also reported that Biden will unveil his big-spending plan to give an extra jolt to the economy, even as it enjoys one of its best years of growth in decades.
Having passed his US$1.9 trillion stimulus soon after taking office this year, the president now has in the pipeline a roads and bridges splurge, which he is aiming to reconcile with Republicans.
Hopes for a deal were given a lift when the Republicans lifted their offer to US$928 billion, after Biden lowered his to US$1.7 trillion. He also wants to push through a US$1.8 trillion American Families Plan.
Oil presses higher
“US stocks pushed higher after... data painted a pretty outlook for the economy and on expectations the US will have the highest amount of federal spending since World War 2,” said OANDA’s Edward Moya.
He added that the Federal Reserve will not likely taper its ultra-loose monetary policy any time soon, despite any inflation worries.
“The economy has a great recovery going, but it is not clicking on all cylinders. A cooling housing market, chip shortages and supply problems for employers all support the Fed’s ultra-accommodative stance a little bit longer. The reopening trade is still going strong.”
After a positive end for the Dow and S&P 500 in New York, Asia pressed ahead with its recent advances. Tokyo jumped 2%, thanks to a weakening yen, while Sydney and Taipei jumped more than 1% apiece.
Hong Kong, Shanghai, Singapore, Seoul and Jakarta were also up, though there were small losses in Manila after a more than 5% surge yesterday.
Oil prices also built on yesterday’s strong gains, with WTI enjoying further buying after its highest close since October 2018, fuelled by bets that the global recovery will boost demand for the black gold, while traders were also eyeing the start of the upcoming US driving season next month.
Brent was also fighting to break back above US$70 a barrel, helped by easing concerns that any possible Iran nuclear deal will see a splurge of fresh supplies in the world market.
“The momentum is there,” Howie Lee, at Oversea-Chinese Banking Corp, said, adding that dealers believe the market “will be able to absorb whatever excess supply comes in”. – AFP, May 28, 2021
