HONG KONG: Asian markets bounded higher again Friday after Wall Street got back to record-breaking ways, with investors growing increasingly optimistic about the economic outlook as vaccines are rolled out and coronavirus rates slow.
Expectations that US President Joe Biden will be able to push through his vast stimulus for the economy also boosted confidence and helped equities put last week’s rout firmly in the rearview mirror, reports AFP.Data showing US unemployment claims had fallen to their lowest level since November added to the positive energy, following a forecast-beating jobs creation reading Wednesday and ahead of a key non-farm payrolls report later in the day.
There was also relief on trading floors that the social media-fuelled buying frenzy that rattled markets last week had subsided.
While virus infections and deaths remain high, investors are hopeful that a slowdown in rates, combined with improved immunisation programmes—more people have now had a jab than have been sick—and the authorisation of more vaccines will soon allow governments to begin easing containment measures.
“While new variants continue to emerge, we are beginning to see real evidence of the vaccine impact on hospitalisation rates and fatalities,” said Lewis Grant at fund manager Federated Hermes.
“As long as the former does not interfere with the latter, the light at the end of the tunnel must edge closer.”
Focus is now on Washington, where US lawmakers are expected to push through a new rescue package for the world’s top economy.And while Republicans have baulked at Biden’s $1.9 trillion plan—and proposed one worth less than a third of that—predictions are that the final bill will be more than one trillion dollars.
The likelihood that the United States will soon be passing a huge spending package again has added to the feel-good factor among trades in recent weeks.
“The tides of US stimulus raising all boats is providing the significant risk-on accelerant,” said Axi strategist Stephen Innes. “Optimism over the colossal US stimulus deal fuses at a critical point when US Covid crisis management regimen turns the corner on a positive note, providing market boosters with excess rocket fuel to burn.”
All three main indexes on Wall Street ended more than one percent higher, with the Nasdaq and S&P 500 hitting new records, and Asia extended the rally.