Sunday, September 24, 2023

Stocks stagnate near record highs ahead of US stimulus expectations Business and Economic News

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Concerns about a possible Trump impeachment have kept Asian stocks from rising to all-time highs despite expectations of “ trillions ” of dollars in new stimulus.

Asian stocks paused near all-time highs on Monday, as US Treasuries yields were at a 10-month high as “trillions” in new US fiscal stimulus were due to be unveiled this week, stoking the possibility of higher inflation.

Investors were keeping a wary eye on US policy as pressure increased to impeach President Donald Trump amid signs that a trial could be in some time.

The MSCI’s largest Asia-Pacific stock index outside of Japan fell 0.2%, after jumping 5% last week to all-time highs. The Japanese stock exchange was on vacation. It closed at a 30-year high on Friday.

South Korea reversed an early jump to fall 1.5%, and Chinese blue chips were flat.

“Asia went through the second global crisis of this millennium with its credentials,” said ANZ chief economist Richard Yetsenga. “Asia’s growth is stronger, with essentially better demographics and debt levels than advanced economies.”

A fortuitous shift between the semiconductor and energy sectors highlighted Asia’s success, as the region produced around 45% of the world’s semiconductors, Yetsenga said.

“For the first time, the market capitalization of the global semiconductor industry has overtaken energy,” he said. “At the time of the last crisis, 12 years ago, the energy sector was more than five times the size.”

US S&P 500 Index futures fell 0.6% from all-time highs, after gaining 1.8% last week. EURO STOXX 50 futures contracted 0.1% and FTSE futures remained stable.

Longer-term US Treasury yields were at their highest since March after weak jobs on Friday sparked speculation on more US fiscal stimulus now that Democrats will have control of the government.

Billions of new landforms

President-elect Joe Biden is due to announce plans for “trillions” in new relief bills this week, much of which will be funded by increased borrowing.

At the same time, the Federal Reserve appears content to put the burden of supporting the economy on fiscal policy, with Vice President Richard Clarida saying there would be no change anytime soon to the $ 120 billion in debt that the central bank buys each month.

With the Federal Reserve reluctant to buy longer-dated bonds, yields on 10-year Treasuries jumped nearly 20 basis points last week to 1.12%, the largest weekly increase since June.

The poor payroll report will increase interest in US data on inflation, retail sales and consumer sentiment.

Profits will also be the focus as JP Morgan, Citigroup and Wells Fargo are among the first companies to release fourth quarter results on January 15.

The rate hike in turn offered some support for the battered dollar lower, which had risen slightly to 90.439 against a basket of currencies from last week’s low of 89.206.

The euro fell to $ 1.2170 after a recent high of $ 1.2349. The dollar also strengthened to 104.18 yen after a low of 102.57 reached last week.

The sudden surge in bond yields undermined gold, which bears no interest, and the metal was down 1.1% to $ 1,828 an ounce from its recent high of $ 1,959.

Oil prices sparked profit taking after reaching their highest level in nearly a year on Friday, gaining 8% the week following Saudi Arabia’s pledge to cut production.

Brent futures plunged 65 cents to $ 55.34, while US crude futures fell 41 cents to $ 51.83 a barrel.


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