TOKYO (REUTERS) – Asian shares rose on Friday (Jan 15), brushing off a late Wall Street dip as expectations of large US stimulus under President-elect Joe Biden shored up sentiment while oil prices perked up on upbeat Chinese trade figures.
President-elect Biden will unveil a US$1.9 trillion (S$2.51 trillion) stimulus package proposal designed to jump-start the economy and speed up the US response to the coronavirus pandemic, officials said on Thursday.
While US stocks spent most of the trading session in positive territory, helped by the stimulus hopes, some concerns about the details of the package led to a modest decline towards the end of Wall Street trade.
“The concern is what it’s going to mean from a tax stand point,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.
“Spending is easy to do but the question is how are you going to pay for it? Markets often ignore politics but they don’t often ignore taxes.”
In Asia, investors held a broadly more optimistic with Australia’s S&P/ASX 200 up 0.4 per cent, Japan’s Nikkei 225 0.04 per cent higher, while South Korea’s Kospi dipped 0.1 per cent.
Singapore’s Straits Times Index was down 0.15 per cent as of 9.05am local time.
Investors had also kept an eye on Federal Reserve chairman Jerome Powell, who struck a dovish tone in comments at a virtual symposium with Princeton University.
Powell said the US central bank is not raising interest rates anytime soon and rejected suggestions the Fed might start reducing its bond purchases in the near term. “The Fed wants to talk down rates and it would be interesting if it steps in to buy long-dated securities and if the bond market breaks because of that,” Mr Ghriskey said.
On Wall Street, the Dow Jones Industrial Average fell 0.22 per cent, the S&P 500 lost 0.38 per cent, and the Nasdaq Composite dropped 0.12 per cent.
On Friday, earnings season will kick into full swing with results from JPMorgan, Citigroup and Wells Fargo . Investors will be looking to see if banks are starting to take down credit reserves, resume buybacks, and provide guidance that shows the economy is improving, said Thomas Hayes, chairman of Great Hill Capital in New York.
“The markets want to see if they are showing confidence. If the guidance is strong, it shows we can sustain this move,” Mr Hayes said.
Meanwhile, oil prices rose on Thursday, boosted by a weak dollar and bullish signals from Chinese import data despite renewed concerns about global oil demand due to surging coronavirus cases in Europe and new lockdowns in China.
Brent crude oil futures rose 36 cents, or 0.6 per cent, to settle at US$56.42 a barrel. US crude ended 66 cents, or 1.3 per cent, higher at US$53.57.
Treasury yields edged higher in anticipation of the new stimulus package. Benchmark 10-year Treasury notes last fell 12/32 in price to yield 1.1292 per cent, from 1.088 per cent late on Wednesday.