HONG KONG, Aug 6 — Asian markets mostly rose today building on a two-day rally, with nervous investors keeping an eye on stimulus talks in Washington, while China-US tensions continued to weigh on confidence.
And while there were hopes over the development of a coronavirus vaccine, the rapid spread of the contagion around the world and fresh flare-ups that have caused renewed lockdowns were keeping a lid on buying sentiment and sending safe-haven gold soaring to record highs.
All three main indexes on Wall Street ended with gains yesterday — the Nasdaq at another record — on bets US lawmakers will eventually reach a deal on another much-needed stimulus for the world’s top economy.
The two parties remain far apart on their proposals, with Democrats’ US$3.5 trillion (RM14.6 billion) plan more than three times bigger than the Republicans’ offer and a key sticking point being supplementary jobless benefits that ran out last week.
“I feel optimistic that there is light at the end of the tunnel,” Democratic House Leader Nancy Pelosi told reporters. “But how long the tunnel is remains to be seen.”
Still, there is agreement that they will eventually have to compromise at some point and Republican Senate Majority Leader Mitch McConnell said next week’s recess could be put off so a deal can be reached.
Analysts said there are broad expectations that upcoming elections will push Congress to eventually reach a deal, while Donald Trump has raised the prospect of using an executive order to push through tax cuts and a ban on evictions.
“For now our sense is that no politician in the US wants to be blamed for a failure to deliver a new round of stimulus ahead of the elections in November,” said National Australia Bank’s Rodrigo Catril.
“US Treasury Secretary (Steve) Mnuchin remarked that while differences remain, at least there was an agreement to set a timeline. So the story continues to be about when the deal will be agreed, rather than if.”
Eyes on election day
The need for an agreement was laid bare with data showing the US added a below-forecast 167,000 private-sector jobs in July, while a broadly positive report on business activity was clouded by a weak employment component.
The China-US stand-off continues to jar nerves, with Beijing on Wednesday warning that a planned visit by US health secretary Alex Azar to Taiwan was a threat to “peace and stability”.
The trip to the island, which China claims as its own territory, would further sour relations between the powers, which have already clashed over several issues including Hong Kong, the virus and Huawei.
And there are worries the rows could lead to a renewal of their economically painful trade war.
“China will likely interpret the trip as a provocative move ahead of planned US-China trade talks on August 15,” said Stephen Innes at AxiCorp, adding that the US move was seen as part of Trump’s anti-China drive leading into the election.
“Even if trade-war risk fades, President Trump will be rushing the podium with his latest technology beef in hand, and the non-stop barrage of China browbeating will likely extend into the November election.”
Asian markets were mostly higher, with Seoul, Singapore, Mumbai and Jakarta more than one per cent up, while Shanghai gained 0.3 per cent and Sydney put on 0.7 per cent.
Taipei, Bangkok and Wellington were also up.
Manila climbed more than one per cent as traders looked past data showing the Philippines economy contracted 16.5 per cent in the second quarter, the worst quarter on records dating back to 1981, and putting it into recession. Observers said there was an expectation that the economy has suffered the worst and would begin picking up in the second half of the year.
However, Hong Kong slipped 0.7 per cent and Tokyo ended down 0.4 per cent.
London was sharply lower, while Paris also dipped but Frankfurt was in the green after data showed a surge in German industrial orders for June.
Key figures around 0810 GMT
Tokyo — Nikkei 225: DOWN 0.4 per cent at 22,418.15 (close)
Hong Kong — Hang Seng: DOWN 0.7 per cent at 24,930.58 (close)
Shanghai — Composite: UP 0.3 per cent at 3,386.46 (close)
London — FTSE 100: DOWN 0.8 per cent at 6,059.28
Euro/dollar: UP at US$1.1865 from US$1.1863 at 2100 GMT
Dollar/yen: DOWN at 105.57 yen from 105.60 yen
Pound/dollar: UP at US$1.3173 from US$1.3113
Euro/pound: DOWN at 90.07 pence from 90.47 pence
Gold: UP 0.3 per cent at US$2,048.41 an ounce
West Texas Intermediate: UP 0.4 per cent at US$42.34 per barrel
Brent North Sea crude: UP 0.3 per cent at US$45.30 per barrel
New York — Dow: UP 1.4 per cent at 27,201.52 (close)
© Agence France-Presse
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