Stimulus sends Asian equities higher

Asian equity markets climb

Wall Street was in a giddy mood on Thursday, as hopes rose overnight that the Biden stimulus would pass through the US Senate relatively intact. The prospect of a juicy wave of government spending and borrowing has lifted US equities, with Wall Street’s rally resuming.

The stimulus fever that swept Wall Street overnight has spilt over into Asian markets today. On Wall Street, the S&P 500 rose 1.09%, the Nasdaq climbed 1.23%, and the Dow Jones gained 1.08%. Aftermarket futures are climbing around 0.20% across all three this morning.

The bullish sentiment has lifted Asian markets with the Nikkei 225 climbing by 1.35%, and the Kospi by 0.55%. Mainland China’s Shanghai Composite has rallied 0.90% with the CSI 300 jumping by 1.10%. The Hang Seng has risen 0.80% with tech IPO fever supporting sentiment in Chinese markets.

Regionally, Singapore is up just 0.15% ahead of Retail Sales this afternoon, with Kuala Lumpur falling 0.20% and Jakarta up just 0.15%. Taipei is 0.90% higher with Bangkok up 0.50% and Manilla up only 0.20%. Australian markets have slavishly followed the US stimulus buzz, the ASX 200 and All Ordinaries rising 1.0%.

Although the tone is generally positive today, the North/South East Asia divide is starkly revealed. ASEAN markets are struggling to buy into the global recovery story with their less tech and manufacturing heavy indices, being heavily weighted to banks, property and commodities, which have been soft this week ex-energy. European equities are likely to open higher although gains may also be limited ahead of the US payroll data.

The week wraps up with key US employment release, in particular US Non-Farm Payrolls, which assumes a greater than expected prominence after the rise in 30-year yields. The ADP Employment survey released earlier this week impressively outperformed, and if recent correlations hold intact, points to a much higher NFP number than the street consensus of 50,000 jobs added. A print well above 100,000 could send equities even higher before the weekend.

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