NEW YORK (Reuters) – Asian equities came under pressure on Tuesday as concerns over US stimulus and escalating coronavirus infections led to a mixed session on Wall Street as the dollar consolidated gains overnight.
Unstable trade reflected concerns over new strains of the deadly virus, coupled with uncertainty over the US $ 1.9 trillion fiscal stimulus plan that hit the opposition from Republicans in Congress.
These factors mitigated the previous optimism fueled by the introduction of vaccines and the anticipation that the new US stimulus would give the world economy a much-needed fiscal blow in the arm.
Jarrod Kerr, chief economist at Kiwibank in Wellington, New Zealand, said equities are also taking a pause after a strong rally last week, but noted that sentiment is still upbeat.
“Risk appetite has clearly improved,” Kerr said. “Central banks and governments need to keep their foot on the accelerator.”
E-mini futures for the S&P 500 remained unchanged at the start of the Asian day. Japan’s Nikkei opened 0.4% lower and New Zealand’s 0.5%. The Aussie dollar was up 0.04% against the greenback to $ 0.771. Australian stock markets were closed for a public holiday.
Fourth-quarter GDP data for the US, Germany and France out this week could cool sentiment. US policymakers should keep the monetary tap open when the Federal Reserve’s Federal Open Market Committee meets on Tuesday and Wednesday.
Wall Street stocks were mixed on Monday with the Nasdaq index gaining 0.69% and hitting a record high in hopes of bumper gains later this week. from large-cap technology companies. The S&P 500 gained 0.36%, however, the Dow Jones Industrial Average index fell 0.12%.[.N][.N/C]
Previously, European equities closed at two-week lows as the collapse in German corporate morale underscored the damage from tighter COVID-19 restrictions.
The pan-European STOXX 600 index reversed early gains and closed down 0.8%. Germany’s DAX was down 1.7%, France’s CAC 40 was down 1.6% and the UK’s FTSE 100 was down 0.8%.
The MSCI global equity index, which tracks shares from 49 nations, was up 0.2%.
All eyes were on Washington when US lawmakers agreed that providing COVID-19 vaccines to Americans should be a priority even if they stuck their horns on the size of the pandemic relief package.
Financial markets have been keeping an eye on a huge package, even as the disagreements have meant months of indecision in a country suffering more than 175,000 cases of COVID-19 a day with millions of people out of work.
“The immediate question now is when will stimulus aid be approved and how much?” asked Christopher Grisanti, chief equity strategist of MAI Capital Management.
The dollar rose to a high of nearly a week against a basket of currencies as volatility in stock markets around the world undermined investor appetite for riskier currencies.
The dollar index, which tracks the greenback against a basket of six currencies, rose 0.12 points, or 0.1%, to 90.358. The euro fell 0.3% last time to $ 1.2140.
Reporting by Alwyn Scott; Montage by Sam Holmes