Asia markets mostly up after US rally

14 August, 2020 12:00 AM printer

HONG KONG: Asian markets mostly rose Thursday following a rally on Wall Street but investors continued to fret over US lawmakers’ failure to find common ground on a new rescue package for their beleaguered economy.

All three main indexes in New York saw more sharp gains fuelled by optimism over the US economic recovery following a forecast-busting jump in inflation that indicated the key consumer sector was revving up again, while hopes for a vaccine and the wall of central bank cash were also providing support, reports AFP.

Asian traders extended the rally in early trade but struggled to maintain momentum.

Tokyo ended up 1.9 percent as a recent drop in the safe-haven yen boosted exporters, while Singapore and Manila also added more than one percent. Seoul, Taipei, Jakarta and Wellington were also higher.

But Hong Kong dipped 0.2 percent, Sydney fell 0.7 percent and Manila shed 0.4 percent.

London sank one percent at the open after jumping more than two percent Wednesday, while Paris and Frankfurt were slightly lower.

“The main force that’s been driving markets the last few weeks has really been momentum,” said Kevin Caron at Washington Crossing.

“We’ve got a market that has taken a great deal of comfort in that fiscal policy is going to be there to support an economy through tough times.”

There was also some cheer about Joe Biden’s choice of Kamala Harris as his running mate for November’s election, with observers pointing out she is not considered anti-business and was a more centre-ground politician than other options.

But stalled talks in Washington dampened the mood.

Traders have continued to bet on Congress eventually agreeing on a new pandemic deal despite long-running animosity between Democrats and Republicans.

But both sides are blaming each other for the lack of movement, with Treasury Secretary Steven Mnuchin saying House Leader Nancy Pelosi would not budge unless their demand for spending of at least $2 trillion is met.

That is well down from the $3.5 trillion initially proposed by Democrats but Republicans say they are unwilling to shift from their $1 trillion plan.

“The Democrats have no interest in negotiating,” Mnuchin said, accusing them of playing politics to hurt Donald Trump with a general election just months away.

But in a joint statement, Pelosi and top Senate Democrat Chuck Schumer said: “Democrats have compromised.”

They added: “Repeatedly, we have made clear to the administration that we are willing to come down $1 trillion if they will come up $1 trillion. However, it is clear that the administration still does not grasp the magnitude of the problems that American families are facing.”