World shares climb on hopes US finally get more stimulus

AP – World shares were mostly higher yesterday, buoyed by hopes the United States (US) Congress may finally deliver fresh aid to help American businesses and families weather the pandemic.

Benchmarks rose in Paris, London, Tokyo and Shanghai fell in South Korea.

Investors were encouraged by the Federal Reserve’s pledge to keep buying bonds until the economy is greatly improved from its current, virus-wracked state.

Congressional leaders also appear to be on the brink of a COVID-19 economic aid package that would extend help to individuals and businesses and ship coronavirus vaccines to millions.

Negotiators were working on a USD900 billion package that would revive subsidies for businesses hit hard by the pandemic, help distribute new vaccines, fund schools and renew soon-to-expire jobless benefits. They are also looking to include new direct payments of about USD600 to most Americans.

Help for the US economy is seen as crucial for the global economy and the many world exporters that rely on American demand to keep their own factories running.

Germany’s DAX advanced 1.1 per cent to 13,709.17 and the FTSE 100 in Britain edged 0.2 per cent higher, to 6,583.81. In Paris, the CAC 40 rose 0.5 per cent to 5,577.28. US markets looked set for gains, with the future for the S&P 500 up 0.6 per cent while the future for the Dow industrials added 0.5 per cent.

Optimism over a possible US stimulus deal after many false starts has been tempered with concern over a resurgence of coronavirus cases in many countries at a time when the rollout of vaccinations has barely begun.

People reflected on the electronic board of a securities firm in Tokyo. PHOTO: AP

In Japan, Tokyo reported 822 new cases of the coronavirus, a new high for the Japanese capital and a sharp increase from its previous record the day before, as the country struggles with a latest wave of resurgence nationwide.

Infections have been on the steady climb nationwide for several weeks and experts raised caution levels for the city’s medical systems to highest on their scale of four.

Still, the Nikkei 225 index gained 0.2 per cent to 26,806.67, while in Hong Kong, the Hang Seng index rose 0.8 per cent to 26,678.38. Australia’s S&P/ASX 200 jumped 1.2 per cent to 6,756.70 and the Shanghai Composite index added 1.1 per cent to 3,404.87. India’s Sensex was up 0.6 per cent.

South Korea’s Kospi lost 0.1 per cent to 2,770.43. Shares also fell in Singapore and Taiwan but rose in other regional markets.

The S&P 500 rose 0.2 per cent to 3,701.17 on Wednesday, about one point off its record set last week. The Dow Jones Industrial Average slipped 0.1 per cent to 30,154.54 and the Nasdaq composite rose 0.5 per cent to 12,658.19, setting a record for the second straight day.

Massive efforts by the Fed helped underpin the market since the spring, and the central bank said on Wednesday that it will buy at least USD80 billion in Treasurys each month and USD40 billion in agency mortgage-backed securities until “substantial further progress” has been made. It also said again that it would keep short-term interest rates at their record low of nearly zero.

But the Fed’s tools alone can help the economy only so much. Lower interest rates can help goose home prices and stocks on Wall Street, for example, but they cannot replace paychecks lost by workers whose businesses have shut because of the pandemic.

Meanwhile, the rising death toll of the pandemic is scaring customers away from businesses and normal economic activity while some governments are restoring restrictions to combat virus outbreaks.

A stimulus deal could help carry the economy through what’s expected to be a bleak winter before one or more coronavirus vaccines helps the economy return to normal.

Meanwhile in other dealings, the yield on the 10-year Treasury was steady at 0.92 per cent yesterday. It was at 0.94 per cent shortly after the Fed’s announcement.

US benchmark crude oil gained 56 cents to USD48.38 per barrel in electronic trading on the New York Mercantile Exchange. It picked up 20 cents to USD47.82 per barrel on Wednesday.

Brent crude, the international standard, climbed 56 cents to USD51.64 per barrel.

The dollar weakened to JPY103.17 from JPY103.47. The euro rose to USD1.2235 from USD1.2199.