Global stocks gain after Trump criticises economic aid bill

BEIJING (AP) — Global stock markets rose yesterday after United States (US) President Donald Trump suggested he may veto a USD900 billion economic aid plan and the World Bank said it expects China to eke out two per cent growth this year and accelerate in 2021.

London and Frankfurt opened higher and Shanghai, Tokyo and Hong Kong rose in light trading ahead of this week’s holiday.

Overnight, Wall Street’s benchmark S&P 500 index lost 0.2 per cent after Trump criticised the aid plan approved by Congress. He urged lawmakers to raise payments to the public.

Investors might believe “Trump is bluffing” or that if he vetoes the plan, Congress can override him, said Jeffrey Halley of Oanda in a report.

That “may be complacent” because legislators are leaving Washington, but “markets appear to be holding off pressing the sell button until the situation clarifies”, said Halley.

Meanwhile, investor nerves were rattled by the emergence of a new coronavirus variant in Britain that spreads more easily. That has prompted some 40 governments to ban travellers from Britain.

A currency trader watches computer monitors near the screens showing the foreign exchange rates at the foreign exchange dealing room in Seoul, South Korea yesterday. PHOTO: AP

In early trading, the DAX in Frankfurt gained 0.5 per cent to 13,486.48 and the CAC 40 in France added 0.2 per cent to 5,480.69. The FTSE 100 in London was down 0.2 per cent at 6,436.15.

On Wall Street, the futures for the S&P 500 and the Dow Jones Industrial Average were up 0.2 per cent.

On Tuesday, the S&P 500 declined 0.2 per cent and the Dow lost 0.7 per cent.

About 65 per cent of the companies in the S&P 500 fell. Communication services, financial and other companies accounted for much of the selling. Tech companies rose.

The Nasdaq composite rose 0.5 per cent to a record.

In Asia, the Shanghai Composite Index rose 0.8 per cent to 3,382.32 and the Nikkei 225 in Tokyo added 0.3 per cent to 26,524.79. The Hang Seng in Hong Kong gained 0.8 per cent to 26,328.89.

The Kospi in Seoul advanced one per cent to 2,759.82 and Australia’s S&P-ASX 200 was 0.7 per cent higher at 6,643.10.

India’s Sensex rose 0.7 per cent to 46,345.60. New Zealand, Singapore and Bangkok advanced while Indonesia declined.

Investors are hoping the aid package approved by Congress after months of wrangling can prop up the economy until the rollout of coronavirus vaccines allows business and consumer activity to revive.

The plan approved on Monday would send USD600 to most Americans, give USD300 per week to the unemployed and deliver other aid to businesses.

Trump, however, complained on Twitter that the measure did too little for ordinary Americans and, possibly referring to foreign aid provisions, too much for other countries.

Trump urged legislators to increase payments to as much as USD4,000 per couple and “get rid of the wasteful and unnecessary items from this legislation and to send me a suitable bill”.

Also yesterday, the World Bank said it expects China’s economy to grow by two per cent this year over 2019 and to accelerate to 7.9 per cent in 2021. China is the only major economy on track to grow this year while activity in the US, Europe and Japan shrinks.

“Economic activity in China has normalised faster than expected, aided by an effective pandemic-control strategy, strong policy support and resilient exports,” the World Bank said in a report.

Even without the new coronavirus variant, the resurgent pandemic has been dragging on the US economy.

Two reports on Tuesday added to discouraging data. One showed consumer confidence fell more than expected this month. Another showed the red-hot housing market is slowing.

In energy markets, benchmark US crude lost 38 cents to USD46.64 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 72 cents on Tuesday to USD47.02. Brent crude, the basis for pricing international oils, declined 34 cents to USD49.82 per barrel in London. It shed 83 cents the previous session to USD50.08 a barrel.

The dollar declined to JPY103.46 from Tuesday’s JPY103.67. The euro gained to USD1.2180 from USD1.2161.