Wednesday, August 10, 2022

Stocks Jump as Biden Inauguration Raises Hope for Economic Recovery in US | Financial market news

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Asian stocks hit record highs after surging on Wall Street as investors bet on increased spending by the U.S. government.

Asian stocks hit new record highs on Thursday, monitoring markets in the United States as investors hoped for more economic stimulus from newly inaugurated U.S. President Joe Biden to offset damage from the COVID-19 pandemic.

Republicans in the U.S. Congress have indicated they are prepared to work with the new president on his administration’s top priority, a $ 1.9 trillion U.S. fiscal stimulus package, but some are opposed to the price of the plan. Democrats took control of the U.S. Senate on Wednesday, but will still need Republican support to push through the program.

But after record-breaking Wall Street closings overnight, Asian markets reflected relief in the face of an orderly transition of power and strong expectations that US stimulus measures will provide continued support to global assets.

Kay Van-Petersen, macro-global strategist at Saxo Capital Markets said democratic oversight of the Senate “does not just increase the likelihood of [stimulus], but the magnitude ”.

“That means this market should be much higher overall and we’re going to get there. We are entering this regime of even more accelerated inflation of asset classes, ”he declared.

The largest MSCI index for Asia-Pacific stocks outside of Japan hit record highs and was up 0.85% for the last time, with markets in the region posting gains.

US President Joe Biden’s Democrats have slim Senate majority, giving him opportunity to push forward ambitious economic reforms [Jim Lo Scalzo/Pool via EPA]

Chinese blue chips added 1.2%, Australian stocks climbed 0.69% and Hong Kong’s Hang Seng broke through the 30,000 mark, up 0.31%.

Japan’s Nikkei was up 0.72%, less than 1% below its 30-year high reached last week.

On Wall Street overnight, the Dow Jones Industrial Average rose 0.83%, the S&P 500 by 1.39% and the Nasdaq Composite by 1.97%. On Thursday, e-mini futures for the S&P 500 hit new highs and rose 0.26% for the last time.

Higher taxes?

“The market still has an optimistic view of tighter regulatory / tax risks given the slim Senate majority, while still expecting further fiscal stimulus,” Tapas Strickland, economist at National Australia Bank, said in a note.

Tech stocks stood out after Netflix Inc said it would no longer need to borrow billions of dollars to fund its TV shows and movies, which pushed its shares up nearly 17% .

Along with Netflix, other big tech companies that are expected to release results in the coming weeks have also jumped. The parent of Google Alphabet Inc was up 5.36%.

As stock market gauges rose, U.S. stimulus hopes weighed on the U.S. currency, pushing the dollar index – representing a basket of the world’s most traded currencies – down 0.1% to 90.319.

The dollar was stable against the yen at 103.52 and the euro gained 0.2% on the day to $ 1.2124.

Benchmark 10-year US Treasuries returned 1.0836%, down slightly from the US close of 1.09% on Wednesday.

In the commodities markets, oil prices fell on an unexpected rise in crude inventories in the United States. US West Texas Intermediate crude plunged 0.56 percent to $ 53.01 a barrel. Brent fell 0.4% to $ 55.85 a barrel.

Spot gold was flat at $ 1,871 an ounce.


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