Asian stocks at all-time highs with Biden inauguration raising hopes for stimulus

SHANGHAI / NEW YORK (Reuters) – Asian stocks climbed to new record highs on Thursday, following US markets as investors hoped for further economic stimulus from recently inaugurated US President Joe Biden to offset the damage caused by the COVID-19 pandemic.

Republicans in the US Congress have indicated they are willing to work with the new president on his administration’s top priority, a US $ 1.9 trillion fiscal stimulus plan, but some are against the plan’s price. The Democrats took control of the US Senate on Wednesday, but will still need Republican support to pass the program.

But after closing record highs on Wall Street overnight, Asian markets reflected relief from an orderly transition of power and strong expectations that US stimulus will provide continued support for global assets.

Kay Van-Petersen, Saxo Capital Markets’ global macro strategist, said that democratic control of the Senate “not only increases the likelihood of greater fiscal (stimulus), but also the magnitude.”

“This means that this market should be much, much, much higher as a whole and we will get there. We are entering this regime of even more accelerated asset class inflation, “he said.

MSCI’s broader index of Asia Pacific stocks outside of Japan hit record highs and was up 0.85%, with markets across the region posting gains.

Chinese blue chips gained 1.2%, Australian stocks were up 0.69%, and Hong Kong’s Hang Seng broke the 30,000 level, climbing 0.31%.

Japan’s Nikkei was up 0.72%, less than 1% from the three-decade high reached last week.

The rises in Asia followed overnight record highs on Wall Street. The Dow Jones Industrial Average was up 0.83%, the S&P 500 up 1.39%, and the Nasdaq Composite gained 1.97%. E-mini futures for the S&P 500 hit new records on Thursday and were up 0.26%

“The market is still taking an optimistic view of tighter regulatory / fiscal risks given the tight Senate majority, while still expecting additional fiscal stimulus,” National Australia Bank economist Tapas Strickland said in a statement.

Tech Shares stood out after Netflix Inc said it would no longer need to borrow billions of dollars to finance its TV shows and movies, pushing its shares up nearly 17%.

Along with Netflix, the rest of the FAANG group, scheduled to report results in the coming weeks, skipped. Google’s parent company Alphabet Inc was up 5.36%.

As equity indicators rose, hopes for US stimulus weighed on the greenback, pushing the dollar index down 0.1% to 90.319.

The dollar was unchanged against the yen at 103.52 and the euro gained 0.2% on the day to $ 1.2124.

Benchmark 10-year US Treasuries returned 1.0836%, down slightly from US close of 1.09% on Wednesday.

In commodity markets, oil prices fell due to an unexpected increase in US crude oil inventories. US West Texas Intermediate crude fell 0.56% to $ 53.01 a barrel. Brent crude was down 0.4% to $ 55.85 a barrel.

Spot gold was unchanged at $ 1,871 an ounce. [GOL/]

Full coverage for Eikon readers of the US presidential transition: here

For multimedia coverage, open in a separate browser

Reportage by Andrew Galbraith in Shanghai and Jessica DiNapoli in New York; edited by Richard Pullin