Asia is cautiously optimistic today

Wall Street lifted by hopes of US stimulus talks

After almost a week of profit-taking, sentiment has lifted in Asia after Congressional Republicans and Democrats have agreed to resume stimulus talks. A fiscal stimulus package is bullish for stocks, but talk and headlines are cheap, though, and the reversal in US markets has seen Asian markets rise only modestly. Having been led to water previously, Asia will want to see concrete progress and not just talk.

In the US overnight, equities reversed what was heading for another profit-taking session, with sentiment gloomy after the Initial Jobless Claims. The negotiations headline propelled Wall Street to a positive finish. The S&P 500 finishing 0.39% higher, the Nasdaq climbing 0.87%, and the Dow Jones edging into the green by 0.15%. Working from home is clearly outperforming “we have vaccines, the world is saved”.

In Asia, the Nikkei 225 has retreated by 0.60%, as concerns mount over spiking Covid-19 cases and the government’s refusal to enact movement restrictions. The Kospi has edged 0.25% higher, with China’s Shanghai Composite and CSI 300 up just 0.10%. Hong Kong is 0.70% higher, while Taipei has fallen 0.10%.

Singapore’s Straits Times has jumped 0.90%, led by their heavyweight banking sector, chemicals and leisure, in a classical light at the end of the tunnel trade. Kuala Lumpur is 0.35% higher, and Jakarta is flat. Manila has jumped 1.20% after yesterday’s rate cut and positive comments this morning from the central bank head. Australian markets are modestly higher, the ASX 200 and All Ordinaries up 0.20%.

US stimulus hopes are likely to be enough to keep equities in the green in Asia this afternoon and lift Europe modestly on its arrival. The follow-through is cautious though and lacks strong momentum. That leaves equities vulnerable to headline shocks. President Donald Trump is attending the Asia-Pacific Economic Cooperation virtual summit today; just saying.

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