fbpx
How Choosing the Right Printer Helps Small Businesses and Content Creators to Save Time, Maximise Productivity and Achieve GrowthRead more Eritrea: World Breastfeeding WeekRead more Eritrean community festival in Scandinavian countriesRead more IOM: Uptick in Migrants Heading Home as World Rebounds from COVID-19Read more Network International & Infobip to offer WhatsApp for Business Banking Services to Financial Institution Clients across AfricaRead more Ambassador Jacobson Visits Gondar in the Amhara Region to Show Continued U.S. Support for the Humanitarian and Development Needs of EthiopiansRead more Voluntary Repatriation of Refugees from Angola to DR Congo ResumesRead more Senegal and Mauritania Are Rich in Resources, Poor in Infrastructure, Now Is the Time to Change That Read more Madinat Jumeirah: Dubai’s Stunning Four Hotel Beach Resort Offers Unirvalled Benefits for Summer StaycationsRead more Measles: EU Provides €450,000 in Humanitarian Response to Measles Outbreaks in SomaliaRead more

Stock markets rally as US spending deal boosts recovery outlook

show caption
Investors have cheered news that Joe Biden and lawmakers from both parties had struck an infrastructure deal worth almost $1 trillion./AFP
Print Friendly and PDF

Jun 25, 2021 - 11:00 AM

HONG KONG, CHINA — Equities and oil prices rose again Friday, building on the week’s global rally, after US lawmakers and the White House agreed a rare bipartisan deal on infrastructure that will provide another huge cash injection into the world’s top economy.

The advance came after the S&P and Nasdaq chalked up more records in New York as traders turned their attention back to the strong recovery from last year’s collapse and away from the expected taper of ultra-loose Federal Reserve monetary policy.

Optimism across trading floors was already buoyant after a string of central bank officials soothed worries that they will take away the punch bowl too quickly.

But buying was given an extra boost by news that Joe Biden had reached an infrastructure deal worth nearly $1 trillion with lawmakers from both parties that could lead to the biggest spending in decades on roads, bridges, ports and broadband.

Politicians had “come together and forged an agreement that will create millions of American jobs, and modernise our American infrastructure to compete with the rest of the world and own the 21st century”, he said at the White House.

He also stressed that it met his requirement of not raising taxes on anyone making less than $400,000 a year. “We’re going to do it all without raising a cent” in new taxes, he said.

“Infrastructure spending strengthens an already very strong economic growth outlook,” said Jeff Buchbinder at LPL Financial. Those investments will “bolster the outlook for corporate profits and should keep this bull market going strong well beyond 2021”.

Asian investors cheered the deal, putting the region on course to end the week on a strong note, with Hong Kong and Shanghai up more than one percent, while there were also healthy advances in Tokyo, Sydney, Seoul, Singapore, Mumbai, Taipei, Manila, Jakarta, Bangkok and Wellington.

London rose in early trade but Paris and Frankfurt dipped.

‘Demand recovery has been swift’ 

And there is a broad view that the passage of the US infrastructure bill will likely fire further gains for equities.

“The positive market tone recognises the potential growth benefits of the compromise, but with the smaller size tempering some of the tax implications to pay for it,” said Kerry Craig of JP Morgan Asset Management.

“Bolstering the support for the US economic and market outlook, many consumers are flush with cash, the labour market is improving, wage growth is increasing, business (capital expenditure) intentions and corporate expansion plans are rising and we have more clarity on the fiscal outlook.”

He added that while the Fed was now moving towards tapering its bond-buying programme, it was likely to move only gradually.

Nowhere is the upbeat outlook more evident than in the oil market, where both main contracts edged up and are sitting around highs not seen since 2018 as traders grow increasingly confident that already strong demand will continue to improve as the recovery progresses.

Traders are now looking forward to the upcoming meeting of OPEC and other major producers where they will discuss whether or not to lift output to prevent a supply shortfall.

“The demand recovery has been swift and there is pressure on OPEC+ to release more barrels, otherwise we might see $80 a barrel by next month,” said Howie Lee at Oversea-Chinese Banking Corp.

Key figures at 0810 GMT 

Tokyo – Nikkei 225: UP 0.7 percent at 29,066.18 (close)

Hong Kong – Hang Seng Index: UP 1.4 percent at 29,288.22 (close)

Shanghai – Composite: UP 1.2 percent at 3,607.56 (close)

London – FTSE 100: UP 0.1 percent at 7,117.98

West Texas Intermediate: UP 0.3 percent at $73.54 per barrel

Brent North Sea crude: UP 0.4 percent at $75.86 per barrel

Euro/dollar: UP at $1.1942 from $1.1933 at 2100 GMT

Pound/dollar: DOWN at $1.3900 from $1.3923

Euro/pound: UP at 85.90 pence from 85.70 pence

Dollar/yen: DOWN at 110.74 yen from 110.84 yen

New York – Dow: UP 1.0 percent at 34,196.82 (close)

— Bloomberg News contributed to this story —

  • bio
  • twitter
  • facebook
  • latest posts

LMBCBUSINESS.COM uses both Facebook and Disqus comment systems to make it easier for you to contribute. We encourage all readers to share their views on our articles and blog posts. All comments should be relevant to the topic. By posting, you agree to our Privacy Policy. We are committed to maintaining a lively but civil forum for discussion, so we ask you to avoid personal attacks, name-calling, foul language or other inappropriate behavior. Please keep your comments relevant and respectful. By leaving the ‘Post to Facebook’ box selected – when using Facebook comment system – your comment will be published to your Facebook profile in addition to the space below. If you encounter a comment that is abusive, click the “X” in the upper right corner of the Facebook comment box to report spam or abuse. You can also email us.