Markets Welcome Biden Presidency with Healthy Gains
Asian and European markets welcomed Joe Biden's first day as US president with broad gains Thursday as investors looked forward with optimism about his economic and Covid-19 recovery plans.
Soon after being sworn in, Biden signed more than a dozen executive orders unwinding many of his predecessor's policies.
These included rejoining the World Health Organization, a move observers say will help in the fight against the devastating disease.
He also brought the US back into the Paris climate accord, as well as extending a mortgage foreclosure moratorium and a pause on student debt repayments.
The moves came as the new administration looks to push through a $1.9 trillion relief package for the world's largest economy that encompasses, among other things, $1,400 cash payments to struggling Americans.
Investors have welcomed Biden's election and his pledges to kickstart growth, which has offset concerns about his plans for higher taxes and market regulation.
In his inauguration address, Biden pledged to "rebuild the economy" and "rebuild the backbone of the country: the middle class".
His pick for Treasury secretary, Janet Yellen, provided a shot in the arm for markets on Tuesday by reasserting her determination to drive through the stimulus package, telling lawmakers to "go big" if they wanted to rescue the economy.
There is also a hope that he will devote more time to fighting the coronavirus, which has killed more than 400,000 people in the United States and two million worldwide.
Still, OANDA's Jeffrey Halley had a word of warning for traders.
"One critical risk remains and is being totally ignored by financial markets everywhere. That is the inclination of the Republican minority in the US Senate to bipartisanship," he said.
"Their silence has been deafening until now on how cooperative they intend to be with the new president."
- 'Seeing through lockdowns' -
Still, all three main indexes on Wall Street surged to record highs, and Asian investors took up the baton with relish.
Tokyo, Shanghai, Sydney, Seoul, Singapore, Taipei, Bangkok and Wellington all rose, though Jakarta dipped while Manila was flat.
Mumbai's Sensex also climbed, topping 50,000 for the first time, while London, Paris and Frankfurt all opened with gains.
Hong Kong was slightly lower on profit-taking after five days of gains, having earlier in the day breached 30,000 points for the first time since April 2019.
"Stock markets continue to reflate post-inauguration with the consensus view now that... Biden's early focus will be more on growth than tax hikes," said Axi strategist Stephen Innes.
"The market is also seeing through longer lockdowns on the premise that Covid vaccinations will lead us out of the pandemic quickly."
The hope for Biden's recovery plans has helped overshadow worries about surging virus cases and the spread of a more infectious strain that has caused headaches for governments as they battle to give jabs to their populations.
Biden has promised to get 100 million people inoculated within his first 100 days and analysts said pharma giant Johnson & Johnson's new one-shot vaccine, which is also easy to transport, would be crucial in achieving that though it has still to be authorised.
"If stimulus happens at the same time that people get vaccinated, the optimism can't help but build," said Keith Buchanan, at GLOBALT Investments in Atlanta.
"It's a fairly safe bet there will be another stimulus package with more direct payments to consumers and individuals and more help for small businesses."
- Key figures around 0820 GMT -
Tokyo - Nikkei 225: UP 0.8 percent at 28,756.86 (close)
Hong Kong - Hang Seng: DOWN 0.1 percent at 29,927.76 (close)
Shanghai - Composite: UP 1.1 percent at 3,621.26 (close)
London - FTSE 100: UP 0.5 percent at 6,772.42
Euro/dollar: UP at $1.2131 from $1.2104 at 2150 GMT
Dollar/yen: DOWN at 103.48 yen from 103.53 yen
Pound/dollar: UP at $1.3701 from $1.3657
Euro/pound: DOWN at 88.54 pence from 88.64 pence
West Texas Intermediate: DOWN 0.4 percent at $53.09 per barrel
Brent North Sea crude: DOWN 0.4 percent at $55.88 per barrel
New York - Dow: UP 0.8 percent at 31,188.38 (close)
Source: Agence France Presse
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