Asian stocks, US equity futures and government bond yields pulled back Friday as investors scrutinized the long-awaited $ 1.9 trillion Covid-19 contingency plan.
With few surprises to surprise investors, attention turned to how much of the package will eventually be passed by Congress, and a reminder that he’s looking for some taxes. Biden’s proposal includes a wave of new spending, more direct payments to households, an expansion of unemployment benefits and an expansion of vaccinations and virus testing programs.
S&P 500 futures slipped after weakness in technology and consumer stocks dragged the benchmark late in the Thursday session. Shares fell in Japan, Hong Kong and South Korea, but rose slightly in Australia. Xiaomi Corp. tumbled after the Trump administration blacklisted the Chinese smartphone manufacturer for its military ties, along with China National Offshore Oil Corp.
Elsewhere, Federal Reserve chairman Jerome Powell said policymakers will not step up interest rates unless they see worrying signs of inflation. Hopes for stimulus measures pushed oil in New York to a new high in 10 months. Bitcoin traded around USD 39,000 as it recovered from this week’s rapid plunge.
Biden’s “American Rescue Plan ”comes now that deaths from the coronavirus have reached record levels and local governments are extending lockdowns to halt the spread of the pandemic during the winter months. The proposal also calls for a federal minimum wage of $ 15 and more to protect against eviction.
“It looks like this was already priced in terms of size,” said Ilya Spivak, chief Asia-Pacific strategist at DailyFX, referring to Biden’s stimulus plan. “The most important question is how much of it is taken away to pass it on. That’s probably the next layer of speculative uncertainty that markets are focused on. Hence the muffled response. “
Investors argue about how high yields can rise before the risky asset rally falter. Traders betting on an economic recovery this year will tolerate high stock valuations, in part because they expect more US fiscal spending and better control of the pandemic with vaccines.
Powell said it is time to hike interest rates “not soon” and that policymakers will “let the world know” well before a decision is made to phase out bond purchases. His comments made the yield curve steeper further draw rates climbed.
As for the virus, China recorded its first Covid-19 death since April, as new clusters continued to expand. France said it will expand tougher curfews across the country to stop the spread of the coronavirus.
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These are some of the main movements in markets:
Shares
- S&P 500 futures are down 0.1% from 11:53 am in Tokyo. The meter lost 0.4% on Thursday.
- The Japanese Topix fell 0.5%.
- Hang Seng was up 0.4%.
- Shanghai Composite climbed 0.5%.
- South Korean Kospi was down 1%.
- The Australian S & P / ASX 200 Index rose 0.3%.
Currencies
- The Bloomberg Dollar Spot Index added 0.1%.
- The yen stood at 103.76 per dollar.
- The offshore yuan was at 6.4651 per dollar.
- The euro bought $ 1.2156.
Bonds
- The yield on 10-year Treasury bonds fell to 1.11%.
- Australia’s 10-year yield dropped to 1.09%.
Raw materials
- West Texas Intermediate crude oil had changed little at $ 53.57 a barrel.
- Gold was at $ 1,852.23 an ounce, up 0.3%.
– Assisted by Dave Liedtka, Kamaron Leach and Claire Ballentine