I’m getting bored writing that headline, but the US stimulus talks continue to be the only driver for US equity markets, and by default, everyone else at the moment. Google (NASDAQ:GOOGL) antitrust cases and poor Netflix (NASDAQ:NFLX) results were ignored by Wall Street, which hung on the words of Nancy Pelosi that they “were still talking and getting closer.”
Wall Street gains extend to Asia
Wall Street finished the day positively, with the S&P 500 climbing 0.47%, the Nasdaq adding 0.32%, and the Dow Jones rising 0.40%. The “still talking” afterglow had spread into Asia with regional equity markets almost unchanged to slightly higher. The Nikkei 225 and Kospi are 0.40% higher, with mainland China’s Shanghai Composite and CSI 300 unchanged. Hong Kong has jumped 1.0% as Ant Financial IPO fever increases with more China IPO’s now on the horizon.
Regionally, Singapore ended 0.60% higher, with Kuala Lumpur flat, weighed down by ongoing political concerns. Taiwan is 0.55% higher, and Manila is 1.0% higher. Australia is muted despite the overnight rally in copper, as markets there await easing signals from the RBA. Nevertheless, both the ASX 200 and All Ordinaries have risen slightly by 0.15%.
In my opinion, the markets continue to ignore that the real risk to the US stimulus deal is the US Senate. If Republican Senate leader Mitch McConnell refuses to introduce a stimulus bill, then the stimulus is dead in the water until after the US election. Based on the recent rhetoric from McConnell and other Senate Republicans, they are not at all inclined to support a giant stimulus bill. One also gets the impression that with one eye on the president’s grim position in the polls, the close race for the Senate and thus, their own jobs, the Senate Republicans are beginning to distance themselves from President Trump. That would reduce his ability to twist the Senate into backing the bill.
US index futures are performing strongly in after-hours trading, and that should ensure that Asian markets stay in positive territory today and will push Europe higher at its open. As ever, the main risk is headline risk, either from stimulus negotiations or the presidential Twitter account.