Wed, 21 Oct 2020

Markets firmer on US stimulus hopes

News24
13 Oct 2020, 04:12 GMT+10

Optimism that US lawmakers will eventually pass a new stimulus package lifted most global markets Monday, with the White House ramping up its offer and President Donald Trump insisting Republicans want to get a deal done.

Wall Street's main indices opened higher, and Europe's top markets were mostly firmer in afternoon trading after a strong session in most of Asia.

"The gains come amid hopes that lawmakers can hammer out a new fiscal relief package as stimulus negotiations continue," said analysts at Charles Schwab brokerage.

However London faltered as additional coronavirus restrictions for specific areas in northern England were unveiled.

There was another strong lead before the weekend on Wall Street, with hopes for a fresh injection of cash into the world's top economy overshadowing a surge in virus infections that have forced some governments to reimpose containment measures and targeted lockdowns.

Investors were sent on a roller-coaster ride last week when Trump first called off talks before doing a U-turn to say they were back on and progressing well.

On Friday, Trump increased his offer, proposing a $1.8 trillion package and saying he favoured an even larger package.

The move has instilled optimism that an agreement can be reached, even though the White House plan is $400 billion short of the one put forward by the Democrats, and both Democrats and Republicans dismissed it over the weekend.

But the stock market still feels broad confidence that Congress will continue to support the US economy with fiscal spending. While enacting a package looks challenging before the November 3 election, one could come soon after, analysts say.

"The narrative coming out of Washington on the next stimulus package is 100 percent 'when and how much,' not 'if,'" said a note from DataTrek Research.

With Democrat candidate Joe Biden well ahead in opinion polls, analysts say traders are increasingly betting he will win next month's election comfortably -- avoiding the uncertainty of a Trump challenge to the result -- and Democrats will take both houses of Congress.

Oil slides

Meanwhile in Asia, Hong Kong and Shanghai led markets higher, both piling on more than two percent with support also coming from hopes President Xi Jinping will use a speech in Shenzhen later this week to announce a further opening up of China's economy.

Sydney, Seoul, Singapore, Jakarta and Wellington also enjoyed healthy gains but Tokyo ended down.

But oil prices slumped on the prospect of more lockdowns in many nations.

"More lockdowns around the globe could also hit economic growth, and oil prices have been weakening today as a result of this," said Chris Beauchamp, chief market analyst at online trading firm IG.

Key figures around 15:30 GMT

Source: News24

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