Stocks

Asia shares inch up as US stimulus hopes boost sentiment

Reuters NEW YORK | Updated on January 15, 2021

Asian shares rose on Friday,brushing off a late Wall Street dip as expectations of large U.S. stimulus under President-elect Joe Biden shored up sentiment while oil prices perked up on upbeat Chinese trade figures.

President-elect Biden will unveil a $1.9 trillion stimulus package proposal designed to jump-start the economy and speed up the U.S. response to the coronavirus pandemic, officials said on Thursday.

While U.S. stocks spent most of the trading session in positive territory, helped by the stimulus hopes, some concerns about the package’s details led to a modest decline towards the end of Wall Street trade.

"The concern is what it's going to mean from a tax standpoint," said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.

"Spending is easy to do, but the question is, how are you going to pay for it? Markets often ignore politics, but they don't often ignore taxes."

In Asia, investors held a broadly more optimistic with Australia's S&P/ASX 200 up 0.2%, Japan's Nikkei 2250.3% higher and South Korea's KOSPI inching up 0.2%.

Investors had also kept an eye on Federal Reserve Chair Jerome Powell, who struck a dovish tone in comments at a virtual symposium with Princeton University.

Powell said the U.S. central bank is not raising interest rates anytime soon and rejected suggestions the Fed might start reducing its bond purchases in the near term."The Fed wants to talk down rates, and it would be interesting if it steps in to buy long-dated securities and if the bond market breaks because of that," Ghriskey said.

On Wall Street, the Dow Jones Industrial Average fell0.22%, the S&P 500 lost 0.38%, and the Nasdaq Composite dropped 0.12%.

On Friday, earnings season will kick into full swing with JPMorgan, Citigroup and Wells Fargo results. Investors will be looking to see if banks are starting to take down credit reserves, resume buybacks, and provide guidance that shows the economy is improving, said Thomas Hayes, chairman of Great Hill Capital in New York.

"The markets want to see if they are showing confidence. If the guidance is strong, it shows we can sustain this move,"Hayes said.

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Published on January 15, 2021
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