Global shares mostly up on optimism for stimulus from Biden

TOKYO (AP) — Global shares mostly rose yesterday on optimism over the new United States (US) administration that earlier set off a rally on Wall Street.

Hopes are high that US President Joe Biden’s administration will mean more support for the struggling US economy, starting a recovery that’s crucial for the export-driven Asian region and the rest of the world.

France’s CAC 40 gained 0.4 per cent in early trading to 5,648.29, while Germany’s DAX rose 0.6 per cent to 14,003.82. Britain’s FTSE 100 edged up nearly 0.2 per cent to 6,753.08. US shares were set to drift higher with Dow futures up nearly 0.1 per cent at 31,116.5. S&P 500 futures rose 0.2 per cent to 3,850.62.

Japan’s benchmark Nikkei 225 rose 0.8 per cent to finish at 28,756.86. Australia’s S&P/ASX 200 gained 0.8 per cent to 6,823.70, while South Korea’s Kospi edged up 1.5 per cent to 3,160.84. Hong Kong’s Hang Seng slipped 0.1 per cent to 29,927.76, while the Shanghai Composite added 1.1 per cent to 3,621.26.

Data released by the Japanese Finance Ministry showed the world’s third largest economy may be crawling toward a recovery, as exports for December rose for the first time in two years, by two per cent from the same month the previous year. Imports declined 11.6 per cent, marking the 20th straight month of declines.

Currency traders watch monitors at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea yesterday. PHOTO: AP

Japan’s economy, like many others across the region, has been slammed by the coronavirus pandemic, which has crushed tourism and dampened economic activity and trade. The Bank of Japan kept its easy monetary policy at its policy board meeting, as expected. Tokyo and other urban areas of Japan are under a state of emergency, as coronavirus cases have surged lately.

Biden took a flurry of executive actions in his first hours as president. He also pitched a plan to pump USD1.9 trillion more into the struggling economy, hoping to act quickly as his Democratic party now controls the White House and both houses of Congress.

The hope on Wall Street is that such stimulus will help carry the economy until later this year, when more widespread COVID-19 vaccinations get daily life closer to normal.

“Most of Wall Street is assuming that the second half (of 2021) is when we will see pent-up demand start to show up in the economy, and that will push economic indicators higher and will likely cause a ramp up in earnings projections,” said Chief Investment Strategist at CFRA Sam Stovall.

Gains for stocks have been accelerating since Biden’s election on enthusiasm about COVID-19 vaccines and potential economic moves. The bump for stocks between Election Day and Biden’s inauguration was bigger than Trump’s bump between his election and inauguration.

“The market is up more than 13 per cent since Election Day,” Stovall said, noting that since World War II, the S&P 500 has risen an average of 3.5 per cent in the first 100 days of a Democratic president’s administration, versus an average gain of 0.5 per cent when a Republican was in the White House.

Analysts have been expressing concerns about pricey stock values heading into the latest round of corporate earnings, but they look more reasonable amid the backdrop of historically low interest rates, said Chief Investment Officer, Americas, at UBS Global Wealth Management Solita Marcelli. The low rates, along with new stimulus and the continued rollout of vaccines, will likely help bolster markets and the recovery.

“We think that global growth is going to continue to pick up,” she said.

In energy trading, benchmark US crude gained 26 cents to USD53.24 a barrel. Brent crude, the international standard, fell 37 cents to USD55.71 a barrel.

In currency trading, the US dollar slipped to JPY103.54 from JPY103.76. The euro cost USD1.2119, down from USD1.2134.