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Asian Stocks Up Over Expectations of Further U.S. Stimulus, Trump Impeachment

·3 min read

By Gina Lee

Investing.com – Asia Pacific stocks were up on Thursday morning, following a mixed session for U.S. shares, over continued expectations of further U.S. stimulus measures and as investors digested the U.S.’ decision to impeach incumbent President Donald Trump.

China’s Shanghai Composite was down 0.38% by 9:38 PM ET (2:38 AM GMT) and the Shenzhen Component slid 2.10%. Trade data released earlier in the day was positive, with all metrics outperforming. Exports grew 18.1% year-on-year, imports grew 6.5% year-on-year and the trade balance was $78.17 billion in December.

Chinese tech companies Alibaba Group Holdings Ltd. (NYSE:BABA) and Tencent Holdings Ltd. (OTC:TCEHY) saw gains in their U.S. shares after reports that the duo could be spared from a U.S. investment ban.

Hong Kong’s Hang Seng Index was up 0.21%. Police have reportedly arrested 11 individuals for aiding a group of 12 people to flee the city.

Japan’s Nikkei 225 jumped 1.45%. South Korea’s KOSPI inched up 0.04% and in Australia, the ASX 200 gained 0.48%.

U.S. Treasury yields saw their first full-session decline in 2021 after rising for six consecutive sessions as investors expect more spending by the incoming Joe Biden administration. An auction of $24 billion in 30-year bonds was also well bid, which dragged yields down further.

However, yields are expected to resume their climb, partly due to expectations of further stimulus packages from the Biden administration, which takes office in the following week.

“There's this push-pull relationship between what happens in the bond market and equity markets … bond yields have risen in prospect of more stimulus spending and if yields continue to rise to there’s going to be some pressure on equity markets,” Allianz (DE:ALVG) Investment Management senior investment strategist Charlie Ripley told Reuters.

Federal Reserve Governor Lael Brainard pushed back against suggestions the Fed could taper its bond-buying program in 2021. Fed Chairman Jerome Powell will take part in a webinar later in the day, where he is expected to discuss topics including the central bank’s policy framework.

Across the Atlantic, European Central Bank council member Francois Villeroy de Galhau said the central bank will keep an easy stance for as long as needed.

The House of Representatives voted 232-197 to impeach Trump on the single charge of incitement of insurrection for his role in a riot by his supporters that left five dead and Capitol Hill ransacked.

This is Trump’s second impeachment, coming a little more than a year after his first and makes him the first U.S. president to face a second impeachment. All Democrats and ten Republicans, including Liz Cheney, voted for the impeachment. Top U.S. officials have reportedly cancelled international travel plans for the week amid the chaos.

Some investors remained cautiously optimistic.

“This will be a great year for the economy and earnings, but just a good year for the stock market … in other words, I think multiples are held back a bit because of modestly rising interest rates and inflation,” Nuveen chief equity strategist Bob Doll told Bloomberg.

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