Asian equities rise

Biden budget lifts Asian equity markets

Asian equity markets are almost all higher today, with Wall Street’s neutral finish offset by reports that the Biden budget tonight will contain some serious spending, some of which will land in the region. Biden’s budget envisages a USD1.8 trillion deficit next year, after tax rises.

The S&P 500 rose 0.12%, while the Nasdaq was unchanged. The Dow Jones caught a cyclical tailwind once again, increasing 0.40%. Index futures on all three have risen strongly in Asian trading on the same fiscal tailwinds; Dow Jones futures are 0.50% higher, while the Nasdaq and S&P futures are up 0.35%.

Japan’s Nikkei 225 has leapt higher by 2.20% as the BoJ is apparently considering extending pandemic support measures as the country grapples with its latest virus wave. The Kospi has risen by 0.70%, with Taipei rising by 1.30%.

The PBOC fixing of the yuan at a two-year high this morning, and its indications that it has no real issue with further appreciation, has dampened spirits in mainland China. Nevertheless, both the Shanghai Composite and CSI 300 are still 0.02% in the green. The strong IPO of JD. Com Logistics today has lifted the Hang Seng, which is 0.60% higher.

Regionally, Singapore is 0.80% higher, with Bangkok climbing 0.95% and Jakarta by 0.60%, while Manila has fallen 1.0%. Kuala Lumpur has also retreated by 0.60% as its latest Covid-19 wave continues to increase in seriousness, raising fears that Malaysia’s tepid domestic recovery will seriously falter. Australia shows no such nerves regarding Victoria, with another good night for commodities and potential US fiscal largesse lifting the ASX 200 and All Ordinaries by 1.10%.

Europe should still open higher today, although it does not have quite the same beta to US government spending that Asia does. New York should also initially move higher again, but with plenty of data and the US budget, later on, how it finishes the week will depend on whether those inflation genies reappear.

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