Asian markets mostly rose Tuesday following a record-breaking lead from Wall Street as investors cheered the passage of a huge US stimulus bill, which has helped temper fears about surging coronavirus infections and a new, fast-spreading strain of the disease.
With Donald Trump’s decision to sign off on the $900 billion rescue package and a post-Brexit trade deal now agreed, the mood on trading floors is a little lighter heading into the new year.
News that more vaccines could be rolled out soon was also providing a lift, even as governments around the world are forced to impose lockdowns and other strict, economically painful measures to contain surging Covid-19 cases.
“Where we are right now in the equity market is somewhat of a sweet spot,” Michael Cuggino, at Permanent Portfolio Family of Funds, told Bloomberg TV. “We’ve got stimulus, likely more on the way.
“You’ve got great comps on earnings going into next year with respect to equities, and you have a pent-up demand situation as the economy both in the US and globally comes out of Covid.”
Trump had held off signing the stimulus package for almost a week saying it did not provide enough cash to Americans and calling for handouts to be jacked up to $2,000 from the $600 amount offered in the initial bill.
Democrats agreed more was needed for people and on Monday the House of Representatives approved a motion to increase the payments, though it will likely meet resistance from Republicans in the Senate.
President-elect Joe Biden, asked by a reporter Monday if he favoured raising the payouts to $2,000, replied, “Yes.”
All three main indexes ended at record highs, as did Germany’s DAX, and most of Asia followed suit.
Tokyo and Wellington piled on more than one percent each, while Hong Kong, Sydney, Singapore, Manila and Jakarta also enjoyed healthy gains. Shanghai barely moved, and Seoul and Taipei were slightly lower.
The cash handouts will “provide that immediate key consumption bridge through the first quarter until the vaccines become more widely distributed”, said Axi strategist Stephen Innes.
“The stipends will arrive quickly and are spent rapidly, providing the US economy with immediate retail sales spending bonanza boost. This splurge could be multiplied by three if the Senate agrees to rubber-stamp support for increased Covid cheques.”