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Markets

Equities mixed with focus on vaccine, virus, stimulus and Brexit

  • Analysts said the next leg-up for equities would be news that US lawmakers had finally reached an agreement on a new rescue package for the battered economy.
08 Dec 2020

HONG KONG: Stock markets swung Tuesday as investors weighed the rollout of vaccines and hopes for US stimulus talks against soaring virus cases and China-US tensions, while the pound dipped with post-Brexit trade talks on a knife-edge.

With Britain planning to begin giving people the jab from Tuesday and the US preparing to approve inoculations soon, the disease continues to run rampant across the United States and Europe while also flaring up again in parts of Asia.

The resurgence of the virus has already forced governments to reimpose lockdowns or strict containment measures, putting fresh pressure on the global economy, which has been ravaged this year.

After a blockbuster November, traders are now taking stock ahead of what many predict will be a bright 2021 that could see a strong economic rebound and market rally.

On Wall Street, the Dow and S&P 500 retreated from records, though the Nasdaq hit another all-time high with tech firms the main beneficiaries of stay-at-home orders.

Analysts said the next leg-up for equities would be news that US lawmakers had finally reached an agreement on a new rescue package for the battered economy.

Democrats have largely thrown their support behind a bipartisan proposal worth $908 billion while there is optimism Republicans will also come on board soon.

Republican Senator Bill Cassidy, who helped put the plan together, said he was confident Donald Trump and Senate Majority Leader Mitch McConnell will come "on board".

"President Trump has indicated that he would sign a $908 billion package -- there's only one $908 billion package out there and it's ours," he told Fox News on Sunday.

"The pain of the American people is driving this and I'm optimistic that both of those leaders will come on board," he added.

And Democratic senator Dick Durbin said: "This is our last chance before Christmas and the end of the year to bring relief to families across America in the midst of a public health crisis.

We've got a few remaining issues. I think we can work them out."

In morning trade, Asia markets were mixed, with Hong Kong, Tokyo, Shanghai and Seoul all down but Sydney, Jakarta and Wellington up. Singapore and Taipei were flat.

Johnson's crunch talks

"Risk appetite is struggling to find direction amid Brexit headlines, rising Covid-19 case counts, and possible further US sanctions on China on the one hand and hopes for US fiscal stimulus and US vaccine approval," said Axi strategist Stephen Innes.

He added: "Investors are pinning their hopes on the ultimate holiday stocking stuffer, which is the capacity for (US) stimulus overwhelming a near-term downturn."

The outcome of Brexit negotiations remains up in the air as British Prime Minister Boris Johnson prepares to visit Brussels for talks with EU chief Ursula von der Leyen after their lead negotiators failed to reach an agreement after eight months of talks.

With the two sides divided over fishing rights, rules for fair trade and an enforcement mechanism for regulatory standards, there is a growing fear a deal will not be done before the December 31 deadline.

Johnson has threatened he will walk away from the talks if Britain does not get what it wants.

"Talks are in the same position now as they were on Friday.

We have made no tangible progress. It's clear this must now continue politically," a senior UK government source said.

"Whilst we do not consider this process to be closed, things are looking very tricky and there's every chance we are not going to get there."

The pound has swung wildly this week and on Tuesday it was slightly lower.

Still, National Australia Bank's Rodrigo Catril said: "From an optimistic perspective, the good news is that nothing has broken yet and the hopes of an EU-UK trade deal remain alive.

In Hong Kong, JD Health -- the medical arm of Chinese e-commerce giant JD.com -- soared more than 40 percent on its market debut after a $3.5-billion initial public offering, the biggest in the city this year.

Key figures around 0300 GMT

   Tokyo - Nikkei 225: DOWN 0.3 percent at 26,475.11 (break)

   Hong Kong - Hang Seng: DOWN 0.7 percent at 26,326.08

   Shanghai - Composite: DOWN 0.1 percent at 3,413.72

   Pound/dollar: DOWN at $1.3356 from $1.3374 at 2150 GMT

   Euro/pound: UP at 90.64 pence from 90.53 pence

   Euro/dollar: UP at $1.2112 from $1.2110

   Dollar/yen: UP at 104.05 yen from 104.03 yen

   West Texas Intermediate: DOWN 0.8 percent at $45.41 per barrel

   Brent North Sea crude: DOWN 0.8 percent at $48.40 per barrel

   New York - Dow: DOWN 0.5 percent at 30,069.79 (close)

   London - FTSE 100: UP 0.1 percent at 6,555.39 (close)