Asia markets ignore Trump veto threat of stimulus bill
US markets had a mixed day as Apple (NASDAQ:AAPL) rallied strongly, lifting the Nasdaq to a 0.51% gain. Covid-19 fears weighed heavily elsewhere though, with the S&P 500 easing 0.21%, and the Dow Jones falling 0.67%. President Trump made headlines by threatening to veto the US stimulus bill, which sailed through both houses of Congress. Further complicating the issue, is that the USD1.4 trillion government funding bill for 2021 is attached to the legislation. If the President does veto the bill, this would mean a federal government shutdown effectively on the 28th of December. In Asia, futures on all three indexes have fallen on the Trump headlines. The Dow Jones and S&P 500 e-minis down 0.40%, while Nasdaq futures are 0.10% lower. My overriding impression is that US equity investors are seeking safety in the tried and true 2020 tech strategy, at the expense of more traditional sectors over the holiday period.
Somewhat surprisingly to the author, Asian equity markets are mostly green today, ignoring the Presidential veto threats weighing on US equity futures. The Nikkei has risen a modest 0.15%, with the Kospi climbing 0.70%, perhaps reflecting its tech-heavy nature. Mainland China’s Shanghai Composite has increased strongly by 0.60%, with the CSI 300 up 0.35%. The PBOC CNY 100 bio liquidity injection this morning via the reverse repo may be contributing to the brighter start from China equities. Hong Kong is just 0.10% higher thus far.
Across the region, Singapore is down 0.05%, with Kuala Lumpur higher by 0.45% and Jakarta down 1.20%, after an overnight cabinet reshuffle and increasing movement restrictions by the government over the holiday period. Thailand is 0.45% lower as its struggle to contain its latest Covid-19, which is sapping sentiment, notably in its beleaguered tourism sector. Australian markets have shrugged of veto fears, the ASX 200 and All Ordinaries rising 0.55%.
Although the tone is generally upbeat in Asia, with the region appearing to believe President Trump is bluffing, if the President does veto the fiscal bill, and US data disappoints tonight, the combination could see equities having their Christmas stolen tomorrow.