Breaking News
0
Ad-Free Version. Subscribe now to follow markets, faster and distraction-free. More details

Stimulus helps stocks shrug off impeachment chaos

EconomyJan 14, 2021 05:12
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: People stand in front of a screen showing Nikkei index outside a brokerage in Tokyo

By Marc Jones

LONDON (Reuters) - Investors shrugged off U.S. President Donald Trump’s record second impeachment and focused instead on reports on Thursday that his replacement, Joe Biden, will lay out a new U.S. $2 trillion stimulus programme later.

Hopes for the supersized package lifted most major stock markets. Japan's Nikkei hit a three-decade peak in Asia (T) and Europe opened 0.4% higher as traders there ignored the prospect of another Italian government collapse. (EU)

In the bond markets there was starting to be signs of selling again.

The yield on 10-year U.S. Treasuries -- the benchmark for global borrowing costs -- rose two basis points to 1.11% as traders contemplated a $2 trillion Biden COVID aid package ramping U.S. debt levels up even further.

European yields were being held in place with the region's stricter COVID lockdowns bolstering bets of more European Central Bank bond buying, but inflation expectation gauges were creeping higher.

Luca Paolini, Chief Strategist at Pictet Asset Management, said an ongoing rise in borrowing rates could unsettle markets if they start to accelerate.

"It could be a bit difficult," he said. "Although I would rather have the Fed (U.S. central bank) hiking rates, bond yields at 4%, growth at 5% rather than everything at zero, because it's more sustainable."

U.S., euro area inflation expectations https://fingfx.thomsonreuters.com/gfx/mkt/rlgpdgwenvo/inflation1401.png

BLACKLIST BOOST

There had been plenty of action overnight in Asia too.

Japan's Nikkei hit its highest level since August 1990 taking its surge since late October to 25%. (T)

Chinese data showed exports there grew more than expected in December - pointing to solid global demand - while machinery orders rose for a second straight month in Japan.

Chinese blue chips eased from a 13-year peak hit on Wednesday as investors took some profits [.SS] though it didn't tell the full story.

The Hong Kong listed shares of Chinese tech giants Alibaba (NYSE:BABA) and Tencent and Baidu (NASDAQ:BIDU) all rose sharply after sources told Reuters and the Wall Street Journal that plans to extend a U.S. investment ban to the stocks had been scrapped.

Alibaba and Tencent alone are worth over $1.3 trillion and are two of three biggest emerging market stocks in the world, making up more the 10% of the widely-followed MSCI emerging market equity index. (MSCIEF)

"I think the market is relieved," said Chinese equity portfolio manager at William Blair Investment Management Vivian Lin Thurston.

"However, concerns over this risk and therefore volatility of these stocks may continue in the near future until perhaps the new (Biden) administration’s China strategy becomes clear."

In commodity markets, oil futures nursed modest losses as fresh surges in coronavirus cases stoke worries about more lockdowns and lower energy demand.

Brent crude futures were down 0.5% at $55.75 a barrel and U.S. crude futures were at $52.70.

Gold, which has suffered as U.S. yields have climbed traded 0.2% lower at $1,840 an ounce - well below a two-month peak of $1,959 hit a week ago. [GOL/]

Biden is due to outline his economic plans later on Thursday and U.S. Federal Reserve Chairman Jerome Powell will also speak, either one of which could set yields rising again.

"The number one question for global markets and equities will be when will the Fed start tapering," said Frank Benzimra, head of Asia equity strategy at Societe Generale (PA:SOGN) in Hong Kong.

"This is where you can get some concern... but at the moment it is something that is a bit premature."

Currency markets are taking a little more of a wait-and-see approach, as investors are short dollars and wondering whether the eventual tapering might limit the greenback's decline.[FRX/]

The dollar rose 0.2% to 104.12 yen. The global recovery-sensitive Australian and New Zealand dollars firmed to $0.7761 and $0.7203 respectively while the euro showed modest losses at $1.2151 and 126.42 yen.

"Fresh elections (in Italy) are still very much the outside bet but it does seem we could be on our way to our 132nd Italian government in the last 160 years." said Deutsche Bank (DE:DBKGn) economist Jim Reid.

Stimulus helps stocks shrug off impeachment chaos
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email