HONG KONG – The deadlock over a new US stimulus and a post-Brexit trade deal weighed on Asian equities today, while surging coronavirus cases continued to offset optimism about the rollout of vaccines.
Hopes US lawmakers could be close to a breakthrough in deadlocked talks helped fire a rally across Asian markets yesterday after the White House proposed an economic rescue package that was bigger than a bipartisan plan put forward last week.
But House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer showed little enthusiasm and the two sides remain stuck on Republican demands for liability protection for businesses and the funding for state and local governments, which is sought by Democrats.
The need for a fresh package – after months of stalled talks – has been highlighted by spiking virus infections in the US, which has forced the reimposition of strict, economically painful containment measures.
“The hope is that Congress would by now have reached an agreement on a spending package to brace and bridge the gap for American households and businesses to when the majority of the population gets inoculated,” said Axi analyst Stephen Innes.
“Sadly, the fiscal fiasco has once again turned into a bit of a political blame game.
“The numbers are aligned for really the first time. It is now the composition where the sticking-points remain, and it’s pure politics right now.”
National Australia Bank’s Rodrigo Catril said: “An optimistic outcome would be that something is agreed next week while the prospect of no stimulus this year remains a high probability.”
All three main indexes on Wall Street fell, and most of Asia followed suit.
Tokyo’s benchmark Nikkei 225 went into the break 0.3% lower at 26,728.9, while the broader Topix index was marginally lower at 1,778.47.
Hong Kong’s Hang Seng Index finished the morning session 0.48% lower at 26,375.97, but the Shanghai Composite Index advanced 0.2%, while small gains were also made in Manila and Bangkok.
Seoul, Taipei, Singapore, Sydney and Wellington were all in the red.There was a similar deadlock across the Atlantic, with British Prime Minister Boris Johnson and European Commission chief Ursula von der Leyen unable to find common ground in crunch talks yesterday.
After eight months of negotiations and with just three weeks until a deadline on reaching a post-Brexit deal, the two sides are still stuck on a number of issues including fishing rights and rules for fair trade.
Brussels and London have agreed to continue talks over the coming days. – AFP, December 10, 2020
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