Stimulus helps global stocks shrug off impeachment chaos


NEW DELHI, jan 14: Investors shrugged off US President Donald Trump’s record second impeachment and focused instead on reports on Thursday that his replacement, Joe Biden, will lay out a new US $2 trillion stimulus programme later.
Hopes for the supersized package lifted most major stock markets. Japan's Nikkei hit a three-decade peak in Asia and Europe opened 0.4% higher as traders there ignored the prospect of another Italian government collapse.
In the bond markets there was starting to be signs of selling again.
The yield on 10-year US Treasuries the benchmark for global borrowing costs rose two basis points to 1.11% as traders contemplated a $2 trillion Biden Covid aid package ramping US debt levels up even further.
European yields were being held in place with the region's stricter Covid lockdowns bolstering bets of more European Central Bank bond buying, but inflation expectation gauges were creeping higher.
Luca Paolini, Chief Strategist at Pictet Asset Management, said an ongoing rise in borrowing rates could unsettle markets if they start to accelerate.
"It could be a bit difficult," he said. "Although I would rather have the Fed (US central bank) hiking rates, bond yields at 4%, growth at 5% rather than everything at zero, because it's more sustainable." There had been plenty of action overnight in Asia too.
Japan's Nikkei hit its highest level since August 1990 taking its surge since late October to 25%.
Chinese data showed exports there grew more than expected in December - pointing to solid global demand - while machinery orders rose for a second straight month in Japan.
Chinese blue chips eased from a 13-year peak hit on Wednesday as investors took some profits though it didn't tell the full story.
The Hong Kong listed shares of Chinese tech giants Alibaba and Tencent and Baidu all rose sharply after sources told Reuters and the Wall Street Journal that plans to extend a US investment ban to the stocks had been scrapped.
Alibaba and Tencent alone are worth over $1.3 trillion and are two of three biggest emerging market stocks in the world, making up more the 10% of the widely-followed MSCI emerging market equity index.
"I think the market is relieved," said Chinese equity portfolio manager at William Blair Investment Management Vivian Lin Thurston.
"However, concerns over this risk and therefore volatility of these stocks may continue in the near future until perhaps the new (Biden) administration’s China strategy becomes clear."
In commodity markets, oil futures nursed modest losses as fresh surges in coronavirus cases stoke worries about more lockdowns and lower energy demand.
Brent crude futures were down 0.5% at $55.75 a barrel and US crude futures were at $52.70.

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