Asian markets rally after Biden unveils roads and bridges plan

Economy

Hong Kong | AFP

Asian investors welcomed Joe Biden’s economy-boosting infrastructure proposals Thursday, sending regional markets higher, while optimism was also given a boost by a healthy US private jobs report.

The US president said his much-anticipated new package will see a “once-in-a-generation” investment of more than $2 trillion in transportation, telecoms and energy infrastructure while creating millions of jobs.

And while he warned his eight-year plan, which comes just months after the passage of a $1.9 trillion stimulus, will be paid for by higher taxes for corporations, analysts said markets likely considered that a concern for later this year or next.

The plan was broadly welcomed on Wall Street, where the S&P 500 ticked up and the Nasdaq rallied more than one percent, though the Dow inched down.

And Asian investors were in a good mood, with many preparing to wind down for the end of an Easter-shortened week.

Tokyo’s gains were helped by a survey showing Japan’s major manufacturers were feeling the most optimistic since September 2019, well before the pandemic began. 

Three months ago, the Bank of Japan’s quarterly Tankan business survey was at minus 10, compared with minus 34 in June -- its lowest since the global financial crisis more than a decade ago.

The poll released Thursday showed a reading of five. A positive figure means more manufacturers see business conditions as favourable than those that consider them unfavourable.

Hong Kong climbed two percent, boosted by news the city’s government would resue its BioNTech vaccine programme on Monday after being stalled for nearly two weeks after flaws were found on some packaging.

Shanghai, Sydney, Seoul, Singapore, Mumbai, Taipei and Bangkok all enjoyed solid gains.

London, Paris and Frankfurt all rose in early trade.

The general gains this week across world markets have followed a stutter in their year-long recovery that has been built on government rescue packages running into trillions of dollars, vast central bank support and more recently the rollout of vaccines.

- US jobs data in focus -

And while there is growing concern that the fast recovery will fan inflation and force banks to tighten their ultra-loose monetary policies, observers remain confident that stocks will press higher this year.

“There is still some room for recovery in stocks that will benefit from the economic recovery and the reopening trade,” Ania Aldrich, at Cambiar Investors LLC, told Bloomberg TV.

“There’s still a lot of growth that has to come and that’s not necessarily reflected in earnings yet.”

The latest sign that the recovery is well on course came in data showing the private sector created more than 500,000 jobs in March, almost three times as many as February, and the most in six months.

The reading raised hopes for the closely watched non-farm payrolls report on Friday, which is used as a key guide to the health of the world’s top economy. Some observers are suggesting the figure could come in above a million new jobs.

The meeting of OPEC and other top oil producers later in the day will be closely watched as they decide whether or not to maintain the output cuts that have been a key pillar of support to the market for the past year.

But while expectations are for demand to pick up as the world economy recovers, the group is tipped to maintain its pace for now. Both main crude contracts rose more than one percent Thursday.

“With oil in storage plentiful in Asia, production recovering in the US, widening Covid-19 restrictions (particularly in Europe) and more Iranian crude heading to China, OPEC+ will have no choice other than to leave production targets unchanged,” said OANDA’s Jeffrey Halley.

- Key figures around 0810 GMT -

Tokyo - Nikkei 225: UP 0.7 percent at 29,388.87 (close)

Hong Kong - Hang Seng: UP 2.0 percent at 28,938.74 (close)

Shanghai - Composite: UP 0.7 percent at 3,466.33 (close)

London - FTSE 100: UP 0.5 percent at 6,747.33

Dollar/yen: UP at 110.73 yen from 110.71 yen at 2140 GMT

Euro/dollar: UP at $1.1738from $1.1730

Pound/dollar: DOWN at $1.3774 from $1.3785

Euro/pound: UP at 85.21 pence from 85.06 pence

West Texas Intermediate: UP 1.5 percent at $60.05 per barrel

Brent North Sea crude: UP 1.4 percent at $63.59 per barrel

New York - Dow: DOWN 0.3 percent at 32,981.55 (close)

dan/je

AFP