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(File photo by Kazuhiro NOGI / AFP)
HONG KONG – Joe Biden’s $ 1.9 trillion stimulus proposal was greeted with a shrug in Asia on Friday, as observers said the wave of massive spending had largely been factored into the valuations, although optimism about the long-term economic outlook continued to provide support.
Federal Reserve Chief Jerome Powell’s assurances that historically low interest rates and loose monetary policy would remain in place for some time also removed some lingering angst on the trading floors.
However, the rise in virus infections and deaths, and the lockdowns they are forcing governments to impose, remain the main obstacles for investors, despite the launch of vaccines that could allow life to return to normal. normal.
Days before taking office, President-elect Biden unveiled his rescue package, which he said addressed “the twin crises of a pandemic and this sinking economy.”
Plans include an additional $ 1,400 cash donation for individuals to complete last month’s $ 600 stimulus, an increase in the minimum wage to $ 15 an hour, and billions of dollars to increase vaccines so that 100 million are administered in 100 days.
There is also money for struggling state and local governments, the safe reopening of schools, and an extension of unemployment benefits.
The need for more financial assistance was highlighted by data showing new claims for unemployment benefits increased by 181,000 last week, the largest increase since the pandemic began in March.
The reassurance of the Fed chief
While well received by investors, the proposals failed to trigger a rally in stocks, with Asian markets mixed at the end of a largely positive week.
Sydney, Singapore, Taipei, Manila and Bangkok rose, but Tokyo, Shanghai, Seoul and Wellington fell and Hong Kong remained flat.
“It looks like this was already priced, at least in terms of magnitude,” said DailyFX’s Ilya Spivak. “The main question is how much is committed to get it approved. That’s probably the next layer of speculative uncertainty that markets are focusing on. Hence the silent answer. “
There are concerns that the bill could get bogged down in the Senate while lawmakers debate the impeachment of Donald Trump, which some observers say could also delay Biden’s cabinet election confirmation hearings.
There has been growing concern about the Fed’s promise to keep borrowing costs at record lows for as long as it takes if a big wave of government spending puts upward pressure on inflation.
But while the bank’s chief, Powell, said Thursday that he expected the economy to recover as people returned to their daily lives and habits, he didn’t think price increases would skyrocket enough to warrant immediate action. while unemployment remained a key concern.
“If inflation were to increase in an unwelcome way, we have the tools for that and we will use them,” he said.
His comments were an “indication that the current ultra-easy Fed policy will continue for the foreseeable future,” said Rodrigo Catril of the National Australia Bank.
Key figures around 0335 GMT
Tokyo – Nikkei 225: DOWN 0.1 percent to 28,664.93
Hong Kong – Hang Seng: FLOOR at 28,496.98 (rest)
Shanghai – Composite: DOWN 0.5 percent to 3,546.96 (rest)
Euro / Dollar: DOWN to $ 1.2151 from $ 1.2154 at 2150 GMT
Dollar / yen: UP to 103.79 yen from 103.74 yen
Pound / Dollar: DOWN to $ 1.3683 from $ 1.3686
Euro / Pound: DOWN to 88.78 pence from 88.80 pence
West Texas Intermediate: 0.1 percent higher at $ 53.62 a barrel
North Sea Brent Crude: DOWN 0.2 percent at $ 56.31 a barrel
New York – Dow: DOWN 0.2 percent to 30,991.52 (close)
London – FTSE 100: + 0.8 percent to 6,801.96 (close)
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