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Asian Stocks Up, Mostly Unperturbed by Chaos in Washington D.C.

Stock MarketsJan 06, 2021 09:57PM ET
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By Gina Lee – Asia Pacific stocks were mostly up on Thursday morning, with a Democrat sweep in U.S. Senate runoff elections in Georgia seeming to override a tumultuous Wednesday in Washington D.C.

Japan’s Nikkei 225 rose 1.84% by 9:51 PM ET (2:51 AM GMT). Japan is set to declare a fresh state of emergency for Tokyo and the neighboring Saitama, Kanagawa and Chiba prefectures later in the day. The state of emergency, which will take effect on Friday, is set to last until Feb. 7.

South Korea’s KOSPI jumped 2.20%.

In Australia, the ASX 200 gained 1.76%. Prime Minister Scott Morrison said that the national cabinet will meet on Friday, a month ahead of schedule.

Hong Kong’s Hang Seng Index inched down 0.02%.

China’s Shanghai Composite edged up 0.17% while the Shenzhen Component was down 0.39%. Reports that the U.S. is considering adding Alibaba (NYSE:BABA) Group Holding Ltd (HK:9988) and Tencent Holdings Ltd (HK:0700) to a blacklist of Chinese companies allegedly owned or controlled by the Chinese military continue to ramp up tensions with China.

The Democrat pair of Jon Ossoff and Raphael Warnock won the two seats in the chamber up for grabs in Georgia, unseating their Republican rivals David Perdue and Kelly Loeffler. The victories saw U.S. shares edge higher over expectations that President-elect Joe Biden will have a smoother path to push his agenda, including more stimulus measures, when his administration takes office on Jan. 20.

Democrats now have control of the political trifecta, including the White House, Senate and the House of Representatives. Sentiment was dampened, but not sunk, as protesters supporting President Donald Trump descended into the Capitol where lawmakers were meeting to certify Biden’s victory in the Nov. 3 presidential elections.

The events did little to dimmish some investors’ trust in the U.S. institutions, as lawmakers were re-escorted into Capitol Hill and resumed the interrupted meeting.

“The mob has interrupted the process of Biden’s confirmation, but the mob will not overturn the process,” Mizuho Securities chief currency strategist Masafumi Yamamoto told Reuters.

“The market is optimistic that Biden’s victory will not be overturned,” and investors are positioning for a U.S. economic recovery, he added.

Other investors pointed to the work ahead for Biden and his team.

“Even though we are bearing witness to the markets’ keen knack of ironing itself out quickly, the most important question now is the sequencing of the Biden policy plan,” Axi Chief Global Market Strategist Stephen Innes said in a note.

“Hopefully, for investors’ concerns, it’s in order of stimulus, infrastructure, and tax changes … while Biden could theoretically get the ball rolling and undo many of the Trump tax cuts for corporations and wealthy individuals on Day One, I cannot imagine that tax hikes are the priority number one when the current mandate is to rid the U.S. of COVID-19 and get the economy roaring again,” the note added.

Meanwhile, the Federal Reserve released the minutes from its December policy meeting on Wednesday. The Federal Open Market Committee will continue purchases of bonds at least at its current pace until the economic recovery had made “substantial further progress,” the minutes said.

Asian Stocks Up, Mostly Unperturbed by Chaos in Washington D.C.

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