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Asian markets drift as stimulus row dents optimism

Published : Sunday, 20 September, 2020 at 12:00 AM  Count : 88

HONG KONG, Sept 19: Asian markets were mixed Friday as investors struggled to reignite the rally that has characterised much of the past six months, owing to a stuttering economic recovery and US lawmakers' failure to agree a new stimulus.
With coronavirus showing no sign of easing as fresh spikes around the world see the reimposition of containment measures including lockdowns, traders are growing increasingly worried about how long it will take to get back on track.
Trillions of dollars in government and central bank cash have provided much-needed support to economies - particularly equity markets - and none more so than in the United States.
And with the first massive rescue package having run its course and Federal Reserve monetary policies such as record-low interest rates having limited effect, pressure is growing on Congress to come up with more help, with the head of the central bank leading the calls.
But there is little hope Republicans and Democrats are anywhere close to reaching a compromise after weeks of bickering.
With nearly 30 million Americans receiving government help, observers said there was growing concern about the impact on the crucial consumer sector that drives the world's top economy.
House speaker Nancy Pelosi on Thursday again pledged to press ahead with talks on a new deal, but said Republicans are unwilling to compromise on the size.
"We have a massive problem in our country," she told reporters, while White House Chief of Staff Mark Meadows said he was "not optimistic" Pelosi would want to have a "meaningful" conversation if dialogue resumed.
The standoff continues despite Trump calling this week for Republicans to increase their proposal.
While the Fed essentially said Wednesday that interest rates would remain low for at least three years, Tapas Strickland at National Australia Bank said it disappointed some.
He added that traders "had expected the Fed to show greater willingness to step in and fill the fiscal void given the US Congress seems unwilling/unable to agree to a new fiscal package.
"The Democratic leadership are still pushing for a larger package (latest being $2.2 trillion), while Republicans are divided with many still strident that any package must be below $1 trillion."
Matt Miskin, at John Hancock Investments, added there was a need for action soon as the economic recovery remained "fragile".
Fed boss Jerome "Powell did not bring up the need for further fiscal support multiple times (Wednesday) just for the sake of it", he said.
"Monetary policy has its limits, the lack of fiscal policy support leaves significant risks to this recovery."
In early trade, Hong Kong, Shanghai, Seoul, Taipei and Jakarta were all higher while Tokyo was marginally up.
But there were slight losses in Sydney, Singapore, Wellington and Manila.
On currency markets, the pound faced fresh pressure after the Bank of England suggested it could adopt a policy of negative interest rates to kickstart the battered economy.   -AFP











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