ASIAN STOCKS SET FOR SOFT START, DOLLAR HOLDS ON
Asian stocks came under pressure on Tuesday as worries about US stimulus and surging coronavirus infections led to a mixed Wall Street session, while the dollar consolidated overnight gains, Alwyn Scott reported for Reuters.
The choppy trade reflected concerns about new strains of the deadly virus, along with uncertainty about the $1.9 trillion US fiscal stimulus plan that has hit opposition from Republicans in Congress.
Those factors tempered earlier optimism stoked by the roll-out of vaccines and anticipation that new US stimulus would give the world economy a much-needed fiscal shot in the arm. Jarrod Kerr, chief economist at Kiwibank in Wellington, New Zealand said equities also were now taking a breather after a strong bull run last week, but noted sentiment was still upbeat. “Risk appetite has clearly improved,” Kerr said. “Central banks and governments need to keep their foot on the accelerator.”
E-mini futures for the S&P 500 were flat early in the Asian day. Japan’s Nikkei opened down 0.4% and New Zealand’s was 0.5% lower. The Australian dollar rose 0.04% versus the greenback at $0.771. Australian stock markets were closed for a national public holiday. Fourth-quarter GDP data for the United States, Germany and France due out this week may cool sentiment.
U.S. policymakers are expected to keep the monetary spigot open when the Federal Reserve’s Federal Open Market Committee meets on Tuesday and Wednesday. Wall Street stocks were mixed on Monday with the Nasdaq index adding 0.69% and hitting a record high on hopes of bumper earnings later this week from mega-cap technology companies.
The S&P 500 gained 0.36%, however, the Dow Jones Industrial Average index slipped 0.12%. Earlier, European shares closed at two-week lows as a slump in German business morale underscored the damage from tighter COVID-19 restrictions.
The pan-European STOXX 600 index reversed early gains and finished 0.8% lower. The German DAX fell 1.7%, France CAC 40 was down 1.6% and the UK’s FTSE 100 declined 0.8%. The MSCI world equity index, which tracks shares in 49 nations, rose 0.2%. The dollar index, which tracks the greenback versus a basket of six currencies, rose 0.12 points or 0.1%, to 90.358. The euro was last down 0.3% at $1.2140.
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