Market Close Jan 08

Fiscal spending hopes fires up bulls

US Treasuries remain under pressure; US job reports seen weak but spending outlook bright; Schroders raises US GDP forecast

Fiscal spending hopes fires up bulls
An employee of a money changer holds a stack of Indonesian rupiah notes before giving it to a customer in Jakarta, in October 2015. Indonesia's foreign exchange reserves increased by $2.3 billion in December to $135.9 billion, mainly due to government's foreign borrowing and tax collection, the central bank said on Friday. File photo by Beawiharta/ Reuters.

(ATF) Hong Kong: Asian markets roared ahead on Friday as investors bet President-elect Joe Biden’s government and a Democrat-controlled Congress would accelerate the pace of stimulus spending in the world’s biggest economy.

Despite expectations of a feeble jobs report later in the US trading session, markets remain optimistic that last week’s stimulus announcement will boost spending and raise income levels.

Japan’s Nikkei 225 index surged 2.36%, Australia’s S&P ASX 200 added 0.68%, Hong Kong’s Hang Seng index advanced 1.14% but China’s CSI300 slipped 0.33% after it hit a 13-year high on Thursday. Regionally the MSCI Asia Pacific index jumped 1.53%.

“Democratic control of the Senate ensures that Biden will be able to get his cabinet approved,” Christine Todd and Paresh Upadhyaya, of Amundi Asset Management, said.

“We could see another fiscal stimulus bill being passed in late Q1. We expect at least $600 billion in additional fiscal stimulus, which will include $1,400 stimulus checks for many Americans, continuation of enhanced unemployment benefits, and $160 billion of assistance to state and local governments.”

Late in the day, US non-farm payrolls data is likely to show a rise of 77,000 jobs last month after rising 245,000 in November, a Reuters survey of economists showed.

Oil, dollar up

Oil prices continued to rise with the WTI crude climbing 0.65% to $51.22 a barrel and Brent crude up 0.9% to $54.89 a barrel.

The US dollar edged up against a basket of currencies by 0.1% to 89.93 and gold fell 1.3% to $1,890 per ounce as risk havens were shunned. US Treasuries were flat with the 10-year yields unchanged at 1.08%.

Fiscal boost and inflation were beginning to play out in markets with some analysts advancing their expectations of the next Fed rate increase.

“The near-term impact will be greater fiscal spending, with Biden having already described the recent $900-billion bill as a 'down payment',” Keith Wade, Chief Economist & Strategist at Schroders, said.

He expects an enhanced bill, with the stimulus cheques most Americans are set to receive increasing from $600 to $2000, an extension of higher unemployment benefits and increased spending on state and local government. He also upgraded his US GDP forecast to 4.8% and 4.5% for 2021 and 2022 respectively, up from 3.8% and 3.5% previously.

“Such growth would reduce unemployment and close the output gap faster, which in turn would mean greater inflationary pressure. Consequently, we would be looking for an earlier rise in the Fed’s target interest rate, potentially in 2023 rather than 2024.”

ATF China Bond 50 Index: Congo debt relief deal boosts China industrial bonds

Also on Asia Times Financial

SoFi $8.65-billion deal could kickstart fintech SPAC flow

The Trump China trade starts to unwind 

China telecoms lose billions as MSCI, FTSE Russell confirm cuts

Honor in 5G tie-up with Qualcomm after cutting ties with Huawei

English-biased digital India leaving millions behind

China cuts prices, boosts access to new critical drugs

Widespread major closures in China lead to major closures

Asia Stocks

· Japan’s Nikkei 225 index surged 2.36%

· Australia’s S&P ASX 200 added 0.68% 

· Hong Kong’s Hang Seng index advanced 1.14%

· China’s CSI300 slipped 0.33%

· The MSCI Asia Pacific index jumped 1.53%.

Stock of the day

Hyundai Motor Group rose as much as 24.5% on the Korea Stock after a report it is cooperating with Apple Inc. to make a range of electric vehicles (EVs) and batteries,

Asian markets US stimulus hopes jobs data GDP forecast oil up dollar up