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Investors eye recovery as most Asia markets rise, Yellen in focus
Traders were also awaiting the Senate confirmation hearing for United States Treasury secretary pick Janet Yellen, which is expected to give lawmakers a chance to go over Joe Biden's huge stimulus proposal.
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Pedestrians walk past a display showing the Hang Seng Index in Hong Kong on Nov. 8, 2017. (Agence France -Presse/Isaac Lawrence)
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ptimism about the global economic recovery and vaccine rollouts trumped ongoing concerns about soaring virus infections Tuesday with most Asian markets clocking up big gains.
Traders were also awaiting the Senate confirmation hearing for United States Treasury secretary pick Janet Yellen, which is expected to give lawmakers a chance to go over Joe Biden's huge stimulus proposal.
US markets were closed Monday for a public holiday but regional investors were mostly in buoyant mood as they prepared for the new president to take office promising a vaccination blitz and a drive to kick-start the economy.
Hong Kong piled on more than three percent at one point, having jumped one percent on Monday, to levels not seen since May 2019 thanks to an inflow of cash from mainland China. The Hang Seng later pared the rally.
Seoul put on more than two percent, while Tokyo, Sydney, Mumbai, Taipei and Bangkok all rose more than one percent, while there were smaller gains in Singapore and Wellington. Shanghai, Manila and Jakarta fell, however.
US futures were in positive territory.
Global coronavirus cases broke 95 million this week while deaths have topped two million, putting pressure on governments to quickly distribute vaccines while at the same time imposing strict, economically painful lockdowns.
While Biden's inauguration on Wednesday is the key event for the week, traders will be keeping a close watch on Yellen's hearing, where the former Federal Reserve chief is expected to tell lawmakers the world's top economy could suffer if they do not approve a big spending plan.
"Economists don't always agree, but I think there is a consensus now: without further action, we risk a longer, more painful recession now — and long-term scarring of the economy later," she was expected to say, the Wall Street Journal reported.
"Over the next few months, we are going to need more aid to distribute the vaccine; to reopen schools; to help states keep firefighters and teachers on the job."
There are fears that Biden's US$1.9 trillion aid package, while welcomed by markets, could face stiff opposition from fiscal conservatives as it goes through Congress, watering down many of its elements.
Investors are also concerned that the massive spending package — the third in less than a year — will lead to higher taxes.
But Axi strategist Stephen Innes said vast financial support from the Fed, government spending and the vaccine rollout "still points to gleaming days ahead".
"It is hard not to like the sound of the Biden administration's overarching focus on public health and economic responses to the COVID-19 pandemic. A crucial part will involve distributing vaccines to hundreds of millions during the administration's first year," he said.
"Indeed, it should be the Biden administration's roll-out policy of vaccinations, not the timing of taxations that should continue to resonate."
And OANDA's Jeffrey Halley added: "With Ms Yellen set to reinforce Mr Biden's stimulus narrative at hearings... equities should maintain a favourable tailwind in the absence of any other news."
