Asia’s mixed open, optimism grows for US COVID relief bill, China Services PMI impresses

US stimulus talks make progress

Asian stocks are off to a mixed start as expectations grow for US lawmakers to reach a bipartisan relief bill this month and as immunization plans are unveiled across the UK and US.  A second COVID relief bill appears likely now that Democrats have returned to the negotiating table with a much lower starting point.  US stocks turned positive after news that House Speaker Pelosi and Senator Schumer supported the USD908 billion stimulus plan as a base for negotiations.

After the US close, the House gave its approval on the bill that will restrict Chinese firms from listing in the US. This legislation has been in the works for several months and will force Chinese firms to allow inspectors to review their books.  Chinese technology stocks opened sharply lower, triggering profit-taking and not likely the beginning of a new trend.

In China, the data continues to impress, as the Caixin Services PMI reading rose to 57.8, exceeding the consensus estimate of 56.4 and the prior 56.8 reading. China PMIs remain well into expansionary territory in both the services and manufacturing sectors. The Asian giant has been the bright spot of the global economic recovery and should continue to lead the way, despite the US regulatory crackdown.

On the employment front, ADP employment change in November rose 307,000, less than the consensus estimate of 430,000 and lower than the revised prior reading of 404,000.  The ADP survey was taken after a jump in weekly initial unemployment claims, so even though the private report has recently under-delivered job hiring compared to the non-farm payroll report, Friday’s main event could provide a soft reading. The official nonfarm payroll report, always a key event, is projected to slow for a fifth consecutive month, with a forecast of 500 thousand. The previous reading was 638 thousand. Wage growth is expected to remain steady at 0.1%.

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Ed Moya

Ed Moya

Senior Market Analyst - The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a market analyst with OANDA, producing up-to-the-minute fundamental analysis of geopolitical events and monetary policies around the world. Over the course of his career, he has worked with some of the world’s leading forex brokerages and research departments including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including BNN, CNBC and Bloomberg, and is often quoted in leading publications including the Wall Street Journal and the Washington Post. He holds a BA in Economics from Rutgers University.
Ed Moya