Global stocks rise with Biden stimulus in focus
NEW YORK: Global equity markets mostly advanced as anticipation for Joe Biden’s plan for substantial new stimulus offset worries about tightening coronavirus restrictions in some markets.
Shortly after US markets closed, details became known of the Biden plan, which proposes $1.9 trillion to revitalize the US economy as it faces an onslaught of coronavirus cases.
The plan comes as government data showed that new applications for unemployment benefits rose sharply in the first week of 2021, surging by 181,000 in the biggest increase since the coronavirus pandemic began in March and a clear demonstration that the economy is faltering.
“The key takeaway from the report for the market is that it simply paints the need for additional stimulus; hence, this bad news gets interpreted as good news,” said market analyst Patrick J. O’Hare at Briefing.com. US indices finished lower following a choppy session. Still, equity markets remain near alltime highs as investors look ahead to a better 2021 economy thanks to coronavirus vaccines.
Federal Reserve Chair Jerome Powell predicted the United States could see a boost of “exuberant spending” after the pandemic, without predicting a spike in inflation.
In Europe, the London stock market closed with a gain of 0.8 percent while Frankfurt rose by 0.4 percent and Paris added 0.3 percent. “A more positive tone in markets has developed ahead of the expected stimulus announcement from Joe Biden,” noted Chris Beauchamp, chief market analyst at trading firm IG. “Investors (are) hoping that the president-elect will move quickly and in substantial form to secure a new package that will bolster the US economy as the vaccine program moves into a higher gear,” he added.
News that outgoing US president Donald Trump had been impeached for a historic second time appeared to have little immediate impact on sentiment, despite worries about more unrest ahead of Biden’s inauguration on January 20.
Mounting COVID-19 cases however remained a worry, with German Chancellor Angela Merkel calling for tougher restrictions to contain the country’s worsening outbreak and pushing for crisis talks with regional leaders, party sources said. Analysts said a vaccine being developed by pharma giant Johnson & Johnson could make a huge difference as it would only need one jab and can be transported more easily. Shares of the pharma giant jumped 1.8 percent.