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AFP
Hong Kong
Asian markets tracked another record on Wall Street Wednesday as traders monitored talks on a key US stimulus package, though they remain on edge as Washington and Beijing plan a review of their much-vaunted trade deal.
Still, long-running uncertainty about the global economic outlook caused by the coronavirus pandemic and a weak dollar helped push gold to new records after breaking the $2,000 barrier for the first time, while Europe braces for a second wave of infections.
With key unemployment benefits and a ban on evictions already lapsed for millions of Americans, Republicans and Democrats remain far apart in talks on a fresh economic rescue package.
House Speaker Nancy Pelosi has warned the Democrats will not budge from their $3 trillion plan, which includes an extension of a $600-a-week supplementary benefit. The Republicans’ $1 trillion proposal sees that handout slashed to $200.
There are worries that failure to reach a deal will deliver a hefty blow to the already stuttering economy.
However, while the two parties appear unable for now to come together on a deal crucial to prevent a financial meltdown, there is an expectation that with an election three months away, they will eventually meet somewhere in the middle.
“The political wrangling has been going on for over one week, but dealers are still a little optimistic that an agreement will be reached,” said David Madden at CMC Markets.
“It was reported that talks have been productive, so that has been keeping the bulls engaged.”
But the ever-present spectre of China-US tensions was again in play after the two sides said they would hold talks on August 15 to review their trade deal signed to much fanfare in January.
With the relationship between the two growing increasingly spiky -- owing to issues including Hong Kong, the coronavirus and more recently TikTok -- there are worries over the agreement, which brought an end to a protracted and painful trade war.
‘Unwelcome can of worms’
Observers point out that China has only imported a fraction of the energy products it said it would under the deal, owing to the impact of the pandemic on world trade.
“Rising trade tensions between the US and China could open up an unwelcome can of worms,” said Stephen Innes at AxiCorp.
“The market’s primary thesis on what ultimately matters for growth assets is whether a US-China geopolitical escalation morphs into an economic dustup.”
However, he pointed out “this could be little more than the US administration browbeating as quashing the trade deal before the election”.
“Ultimately, rolling back the trade deal would dent stock market sentiment... (which) one would think President Trump would vehemently oppose in a run-up to the 2020 elections.”
Hong Kong rose 0.6 percent and Shanghai ended up 0.2 percent while Seoul, Singapore and Manila each piled on more than one percent. Mumbai, Taipei and Jakarta were also in positive territory.
Tokyo, Sydney, Bangkok and Wellington were slightly lower.
London, Paris and Frankfurt rose at least one percent in early trade.
Hong Kong
Asian markets tracked another record on Wall Street Wednesday as traders monitored talks on a key US stimulus package, though they remain on edge as Washington and Beijing plan a review of their much-vaunted trade deal.
Still, long-running uncertainty about the global economic outlook caused by the coronavirus pandemic and a weak dollar helped push gold to new records after breaking the $2,000 barrier for the first time, while Europe braces for a second wave of infections.
With key unemployment benefits and a ban on evictions already lapsed for millions of Americans, Republicans and Democrats remain far apart in talks on a fresh economic rescue package.
House Speaker Nancy Pelosi has warned the Democrats will not budge from their $3 trillion plan, which includes an extension of a $600-a-week supplementary benefit. The Republicans’ $1 trillion proposal sees that handout slashed to $200.
There are worries that failure to reach a deal will deliver a hefty blow to the already stuttering economy.
However, while the two parties appear unable for now to come together on a deal crucial to prevent a financial meltdown, there is an expectation that with an election three months away, they will eventually meet somewhere in the middle.
“The political wrangling has been going on for over one week, but dealers are still a little optimistic that an agreement will be reached,” said David Madden at CMC Markets.
“It was reported that talks have been productive, so that has been keeping the bulls engaged.”
But the ever-present spectre of China-US tensions was again in play after the two sides said they would hold talks on August 15 to review their trade deal signed to much fanfare in January.
With the relationship between the two growing increasingly spiky -- owing to issues including Hong Kong, the coronavirus and more recently TikTok -- there are worries over the agreement, which brought an end to a protracted and painful trade war.
‘Unwelcome can of worms’
Observers point out that China has only imported a fraction of the energy products it said it would under the deal, owing to the impact of the pandemic on world trade.
“Rising trade tensions between the US and China could open up an unwelcome can of worms,” said Stephen Innes at AxiCorp.
“The market’s primary thesis on what ultimately matters for growth assets is whether a US-China geopolitical escalation morphs into an economic dustup.”
However, he pointed out “this could be little more than the US administration browbeating as quashing the trade deal before the election”.
“Ultimately, rolling back the trade deal would dent stock market sentiment... (which) one would think President Trump would vehemently oppose in a run-up to the 2020 elections.”
Hong Kong rose 0.6 percent and Shanghai ended up 0.2 percent while Seoul, Singapore and Manila each piled on more than one percent. Mumbai, Taipei and Jakarta were also in positive territory.
Tokyo, Sydney, Bangkok and Wellington were slightly lower.
London, Paris and Frankfurt rose at least one percent in early trade.
