Biden announces USD1.9 trillion stimulus plan
Wall Street was content to mark time awaiting the unveiling of the Biden stimulus package overnight. The stimulus goodies package comes with an impressive tag of USD1.90 trillion, with more stimulus in the works. The next stage “New Deal” plan will almost certainly require tax increases to pay for it. And herein lies the rub; namely, the US Senate. The Democrat majority in the House should be enough to ensure the passage of Mr Biden’s wishes. The Senate though is another matter, even with a Vice-Presidential 50-50 casting vote. It should be noted that not all of Mr Biden’s spending wishes can be passed with a simple Senate majority, notably the aid for states and municipalities. It runs into a process called reconciliation and the Byrd rule that can only be overridden by 60 Senate votes. Given the Republicans’ deep reluctance to provide state aid, Biden will have a tricky time passing a New Deal through the Senate.
The S&P 500 eased by 0.14%, the Nasdaq fell just 0.12%, and the Dow Jones edged lower by 0.22%. Post the package unveiling; after-market US index futures have remained slightly negative.
Asian stock markets have, by and large, moved modestly higher today, with the headline numbers of the Biden package a positive for cyclical recovery sentiment. That excitement, though, is being tempered by the challenges of the new administration in passing the package through Congress, and the new sanctions imposed on Chinese companies overnight.
The Nikkei 225 is unchanged, but the South Korean Kospi has fallen by 1.0% after the Bank of Korea left interest rates unchanged this morning at 0.50%. Hopes had risen for a surprise rate cut after soft labour market data earlier this week. In China, the Shanghai Composite has risen 0.40%, with the CSI 300 just 0.10% higher, with overnight sanctions by the US falling more heaving on companies and sentiment in that index. The Hang Seng is up only 0.40% today for much the same reasons.
Regionally, Singapore has climbed 0.30% with Kuala Lumpur up 0.10% with Jakarta and Manila unchanged. Australian markets have risen modestly, the All Ordinaries and ASX 200 moving 0.30% higher.
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