Market Close Nov 13

Investors cautious on vaccine, stimulus delay

US stimulus could be delayed and smaller than expected as economy improves; Dollar remains under pressure; Central bank decisions awaited in China, Indonesia, Philippines and Thailand next week 

Investors cautious on vaccine, stimulus delay

(ATF) Hong Kong: Asian markets stumbled on Friday as investors worried about the time it would take for a roll-out of a vaccine even as the coronavirus spread surged in many countries reigniting fears of a further economic slowdown.

The mood was further dampened when the US stimulus package hit another roadblock after a report the Trump administration is stepping back from negotiations and Senate Majority Leader Mitch McConnell continued to reject calls from Democrats for a new deal.

US-China tensions are also seen rising after Washington unveiled an executive order prohibiting American investments in Chinese firms that Washington says are owned or controlled by the Chinese military.

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Japan’s Nikkei 225 index fell 0.53%, and China’s CSI300 slipped 1.05% with the regional MSCI Asia Pacific index retreating 0.88%.

“We continue to expect Congress to approve additional fiscal support in the range of $1 trillion, but political and vaccine-related developments make this more likely to come in early 2021 than in the lame-duck session of Congress that we expect to wrap up by mid-December,” said Goldman Sachs in a note.

US Treasuries were flat with the 10-year yield unchanged at 0.88% and gold edged up 0.2% to $1,880 per ounce reflecting the watchful mode. The dollar continues to weaken with the currency down to below 93 against a basket of currencies.

“The enhanced optimism on a vaccine and a Biden victory tell us that dollar bearishness is likely to become entrenched in coming months,” said Oxford Economics in a note.

“In coming years, our forecasts anticipate a less favourable backdrop for the dollar. The weakness of the dollar in turn is set to boost – at least cyclically – the outlook for cyclical reflation in the way that hasn’t happened throughout the previous expansion. And the key basis of this view is that there are signs of more synchronised growth in 2021.” 

In the week ahead, interest rate decisions in China, Indonesia, Philippines and Thailand will be watched as will monetary policy messages from central bankers.

Also on Asia Times Financial

Asia Stocks

  • Japan’s Nikkei 225 index fell 0.53%
  • Australia’s S&P ASX 200 dipped 0.20% 
  • Hong Kong’s Hang Seng index edged down 0.04%
  • China’s CSI300 slipped 1.05%
  • The MSCI Asia Pacific index retreated 0.88%.

Stock of the day

Wuxi Biologics rose as much as 7.1% after the company passed a resolution subdividing each one of its shares into three increasing the affordability among retail investors.

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