Stocks higher as Washington chaos fails to dislodge recovery bets

By Imani Moise NEW YORK (Reuters) - Asian stocks perked up on Thursday as investors remained confident that violence in Washington would not disrupt a legitimate transition to a new presidency or derail political support for a U.S. economic recovery

Reuters January 07, 2021 07:05:33 IST
Stocks higher as Washington chaos fails to dislodge recovery bets

Stocks higher as Washington chaos fails to dislodge recovery bets

By Imani Moise

NEW YORK (Reuters) - Asian stocks perked up on Thursday as investors remained confident that violence in Washington would not disrupt a legitimate transition to a new presidency or derail political support for a U.S. economic recovery.

Wall Street had given up early gains on Wednesday after supporters of President Donald Trump stormed the legislative building, disrupting the congressional vote to certify the 2020 presidential election results.

However, investors remained defiantly bullish in early Asian trade with S&P 500 futures up 0.3%, Japan's Nikkei 225 rising 1.24% and the S&P/ASX 200 1.25% higher.

Supporting sentiment were Democratic wins in two closely watched U.S. Senate runoff elections in the state of Georgia on Wednesday, which swung the balance of power in President elect Joe Biden's favor. Despite earlier worries about the economic risks of a "blue sweep", expectations for a large fiscal stimulus package in early 2021 are now pushing markets higher.

Markets analysts also felt that cooler heads will ultimately prevail despite the ongoing unrest in Washington.

"The mob has interrupted the process of Biden's confirmation, but the mob will not overturn the process," Masafumi Yamamoto, chief currency strategist at Mizuho Securities in Tokyo said. "The market is optimistic that Biden's victory will not be overturned," he said, noting that investors are positioning for a U.S. economic recovery.

World leaders quickly chimed in to condemn the riots, but also affirmed their trust in U.S. institutions.

On Wednesday, the Dow Jones Industrial Average rose 1.44% and the S&P 500 gained 0.57%, although the Nasdaq Composite ended 0.61% lower amid concerns that a Democratic-controlled U.S. government would take aim at big tech companies.

"Even though we are bearing witness to the markets' keen knack of ironing itself out quickly, the most important question now is the sequencing of the Biden policy plan," Axi Chief Global Market Strategist Stephen Innes wrote in a note.

"Hopefully, for investors' concerns, it's in order of stimulus, infrastructure, and tax changes.

"While Biden could theoretically get the ball rolling and undo many of the Trump tax cuts for corporations and wealthy individuals on Day One, I cannot imagine that tax hikes are the priority number one when the current mandate is to rid the U.S. of the virus and get the economy roaring again." 

MSCI's gauge of stocks across the globe also gained 0.45%, but emerging market stocks finished 0.35% lower as World Bank Group President David Malpass warned many poorer countries are headed towards default if their debt burdens aren't adjusted.

Bond yields jumped in anticipation of a larger stimulus package. Benchmark 10-year notes last fell 24/32 in price to yield 1.0355%, from 0.955% late on Tuesday.

The dollar index inched 0.086% lower after sinking to its lowest level in nearly three years, with the euro up 0.27% to $1.2327.

Oil prices were higher, following Saudi Arabia's decision to voluntarily cut production and on a drop in U.S. crude inventories. Brent crude settled up 1.3%, at $54.30 a barrel, while U.S. crude futures settled 1.4% higher at $50.63.

Spot gold dropped 1.6% to $1,918.06 an ounce.

(Reporting by Imani Moise; Editing by Sam Holmes)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.