Market Close Dec 23

Markets pare gains after Trump’s threat

Possibility of US government partial shutdown forces markets off highs; Pound gains on Brexit deal hopes; Many Asian economies cope well against pandemic resurgence but virus deterioration could pose risk

Markets pare gains after Trump’s threat
Investors look at screens showing stock information at a brokerage house in Shanghai. Photo: Reuters

(ATF) Hong Kong: Asian markets were rattled by US President Donald Trump’s tweeted threat to block the $892 billion coronavirus relief bill in a veto that could result in a partial government shutdown in the world’s largest economy.

But the undertone was firm and despite the market giving up some of its gains, most benchmarks stayed in positive territory.

Japan’s Nikkei 225 index edged up 0.33%, Australia’s S&P ASX 200 advanced 0.66%, Hong Kong’s Hang Seng index jumped 0.85% and China’s CSI300 added 0.85%. Regionally, the MSCI Asia Pacific index gained 0.75% in holiday-thinned trade.

But the evolving virus situation remained on top of investor minds after the emergence of a new variant of the coronavirus that appears to spread more quickly.

Gold jumped on this uncertainty rising 0.3% to $1,868 per ounce.

“Emerging market (EM) Asian equities have performed well compared with those in other EMs when coronavirus concerns have worsened this year, but we suspect any further deterioration in the virus situation would not provide the same support,” said Thomas Mathews, Markets Economist at Capital Economics.

Lower forecasts

New major outbreaks in Korea, Hong Kong, Malaysia and Thailand are posing a significant downside risk to their 2021 GDP forecasts.

“The success these countries had in suppressing earlier outbreaks of the virus also give us hope that they will be able to contain the virus without resorting to damaging nation-wide lockdowns,” Capital Economics analysts wrote in a note.

They said that in the event lockdowns are introduced, it will be the service sector, especially the hospitality industry, that will be hit hardest. Retail will also feel some pain, although a switch to online shopping should help to lessen the blow.

Industrial sectors should continue to perform well, the note added.

"Factories would be allowed to remain open and should continue be boosted by strong sales of consumer goods, especially electronic items.”

The British pound recovered amid the possibility that the UK and European Union will strike a deal on Wednesday, according to media tweet. This comes ahead of the December 31 end of the Brexit transition period, with the two sides yet to agree on a trade deal. The currency rose 0.4% against the dollar to above $1.34.

Also on Asia Times Financial

Asia Stocks

  • Japan’s Nikkei 225 index edged up 0.33%
  • Australia’s S&P ASX 200 advanced 0.66% 
  • Hong Kong’s Hang Seng index jumped 0.85%
  • China’s CSI300 added 0.85%
  • The MSCI Asia Pacific index gained 0.75%

Stock of the day

Kunlun Energy shares rose as much as 19.7% after agreeing to sell a 60% stake in a Beijing natural gas pipeline and a 75% stake in its Dalian LNG company for 40.9 billion yuan ($6.3 billion) to the new state-owned firm known as PipeChina.

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