Asian markets track Wall Street surge, focus turns to Capitol Hill

People wear protective masks as they walk past a panel displaying the Hang Seng Index during morning trading, following the outbreak of the new coronavirus, in Hong Kong March 13, 2020. — Reuters pic
People wear protective masks as they walk past a panel displaying the Hang Seng Index during morning trading, following the outbreak of the new coronavirus, in Hong Kong March 13, 2020. — Reuters pic

HONG KONG, Aug 4 — Asian stocks rallied today following another record close on Wall Street, with investors cheered by forecast-beating US data and hopes for fresh stimulus for the world’s top economy.

But while there are small signs of a slowdown in infections in key US states, the spread of the virus across the planet and the re-introduction of strict containment measures continue to be overwhelming factors keeping equities from extending gains.

Tech fuelled a surge in New York, sending the Nasdaq to a new all-time high, as traders looked for firms likely to benefit from people being forced to stay or work from home.

There was also a cheer for figures showing the US manufacturing sector expanded last month at its fastest pace since March last year, which followed strong factory readings from China and Europe.

Still, AxiCorp’s Stephen Innes said: “The composition of China’s economic recovery offers a roadmap to the rest of the world that is not especially bullish for a consumer-driven rebound.

“It’s easier to normalise the supply-side of the economy than the demand side in a post-pandemic-shock environment.”

Attention is now on Washington, where Democrats and Republicans are battling to hammer out a new package to save the US economy from the ravages of the pandemic.

With extra unemployment benefits and a moratorium on evictions now dried up, there are worries millions of Americans will suffer if nothing is passed soon, which would batter the already stuttering economy.

Democrat House Speaker Nancy Pelosi said a meeting with Treasury Secretary Steven Mnuchin and White House chief of Staff Mark Meadows had been “productive”.

Expectations for a deal

In the Senate, Chuck Schumer said both sides were “moving closer” but added there were a “lot of issues that are still outstanding”.

Reports said Donald Trump, facing an election in November and trailing in polls, was considering using an executive order to re-impose the ban on evictions and push through a payroll tax cut.

Leaders of top companies including Walmart, Facebook, Microsoft, Google-parent Alphabet and Starbucks urged lawmakers to push a deal through, warning of a “catastrophic” impact on the economy and employment if a new round of federal aid is withheld.

While Washington was locked in dispute, there was still an expectation they would reach a consensus.

“There’s a big desire from both parties to get some kind of stimulus passed. I think the market is expecting that,” said Bob Phillips, at Spectrum Management Group.

And Rodrigo Catril of National Australia Bank added: “For now it seems that the market is travelling with the expectation that a deal will eventually be struck, so it is a matter of when not if.”

Tokyo finished 1.7 per cent higher after rallying more than two per cent on Monday, helped by a drop in the yen that supported exporters, and Sydney piled on almost two per cent.

Hong Kong jumped two per cent and Sydney piled on 1.9 per cent, while Mumbai was up 1.7 per cent.

Seoul, Taipei, Singapore, Manila and Jakarta were all more than one per cent up. Wellington and Bangkok were up almost one per cent, and Shanghai edged slightly higher.

Paris and Frankfurt were up in the morning but London dipped slightly.

Key figures around 0810 GMT

Tokyo — Nikkei 225: UP 1.7 per cent at 22,573.66 (close)

Hong Kong — Hang Seng: UP 2.0 per cent at 24,946.63 (close)

Shanghai — Composite: UP 0.1 per cent at 3,371.69 (close)

London — FTSE 100: DOWN 0.2 per cent at 6,019.73

Euro/dollar: UP at US$1.1798 from US$1.1764 at 2100 GMT 

Dollar/yen: DOWN at 105.88 yen from 105.95 yen 

Pound/dollar: UP at US$1.3103 from US$1.3076 

Euro/pound: UP at 90.04 pence from 89.97 pence 

West Texas Intermediate: DOWN 0.4 per cent at US$40.84 per barrel 

Brent North Sea crude: DOWN 0.5 per cent at US$43.94

New York — Dow: UP 0.9 per cent at 26,664.40 (close) — AFP

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