Market Close Oct 07

US stimulus doubts keep investors on edge

Australia charged by budget boost; Hong Kong optimism elevated ahead of Ant Group IPO; US Treasuries savaged ahead of jumbo supply

US stimulus doubts keeps investors on edge
Tesla is in talks with BHP Group about a nickel supply deal as the electric-car maker targets higher production and seeks to avoid a supply crunch, Bloomberg News reported on Tuesday. Talks are held up on pricing and no final agreement has been reached so far. The photo shows a nickel sulphate plant BHP is building to service the battery industry at its Nickel West operations, south of Perth. REUTERS/Melanie Burton.

(ATF) Hong Kong: Financial markets bounced back from early lows struck after US President Donald Trump abruptly called off talks on a further relief plan until after the elections as investors expressed disbelief that this was the end-game for stimulus.

But even as Donald Trump said in a tweet he was ready to support the Paycheck Protection Program and urged Congress to provide a $25-billion bailout for US airlines, there seems to be hesitancy that a bumper relief package is in the pipeline in the near-term. The election outcome would determine the magnitude of the post-election fiscal package.

“Stimulus odds are lower following President Trump’s announcement that talks with Speaker Pelosi have ended,” Goldman Sachs economists said in a note.

“Very limited fiscal measures are possible on a piecemeal basis, like airline aid, but not some of the larger items such as stimulus payments that the President has suggested Congress consider as a standalone policy. More substantial fiscal support is likely post-election and will depend on the election outcome.”

In Asia, Japan’s Nikkei 225 index dipped 0.05% but Australia’s S&P ASX 200 added 1.25% boosted by a A$22 billion budgetary boost and Hong Kong’s Hang Seng index advanced 1.09%, lead by the technology sector rallying ahead of the Ant Group IPO, expected to be the world’s largest IPO.

Morrison splashes the cash DownUnder

After markets shut on Tuesday, Australia announced a budget that would provide fiscal support of around 2.5% of GDP in 2021/22.

“The budget has provided a combination of income support with return to work policies. The income emergency measures implemented in March 2020 will remain in place until March 2021, though these have already been lowered from October,” BofA Securities analysts said in a note, while adding that aim was to boost household income through fast tracking the tax reform that kicked off in the previous budget, likely to add around $12 billion to household income throughout the 2021 financial year.

“These policies have proved effective as we have seen household income rising sharply in 2Q GDP.”

Meanwhile, the US dollar weakened slightly to 93.68 against a basket of currencies and that provided a boost to gold which rose 0.4% to $1,885 per ounce. US Treasuries fell with the benchmark 10-year yield rising 4 basis points to 0.77% ahead of a $35-billion issuance scheduled for later in the day.

Also on Asia Times Financial:

Battle for rare earths escalates as Pentagon gets involved

Signs of housing bubble deflating in China's outlying cities 

Ban on SMIC stirs call for 'Long March' to counter US chip dominance 

Huawei counters US ban with MediaTek link-up

Recovery will be stop-start if Covid-19 treatment not found

Asia Stocks

· Japan’s Nikkei 225 index dipped 0.05%

· Australia’s S&P ASX 200 added 1.25% 

· Hong Kong’s Hang Seng index advanced 1.09%

· The MSCI Asia Pacific index inched down 0.04%.

Stock of the day

Property developer Greentown China rose as much as 14.9% after it said its sales rose 30.4% in the nine months to September.