Stocks rise as Biden’s spending plan boosts US outlook

SINGAPORE / NEW YORK (Reuters) – Stocks shot higher Thursday after their weakest quarter of the year, as higher Treasury yields supported the dollar, as investors analyzed details of a plan government spending of $ 2 trillion and was hoping for solid jobs data later in the week.

The largest MSCI index of Asia-Pacific stocks outside of Japan rose 0.6% after falling slightly on Wednesday. Japan’s Nikkei rose 1.3% as a survey showed the mood of major manufacturers rebounded to pre-pandemic levels.

Ten-year US Treasuries, which suffered their biggest sell off in a dozen years in the last quarter, remained under pressure and yields climbed to 1.753%, while the dollar hovered slightly less than a one-year high on the yen at 110.685.

On the heels of a $ 1.9 trillion pandemic relief plan, President Joe Biden on Wednesday presented a broad plan to rebuild the world’s largest economy, including spending on roads, railways , broadband, clean energy and semiconductor manufacturing.

“We’ll probably see more purchasing power from the stimulus than from slipping (accompanying) taxes,” said Jun Bei Liu, portfolio manager at Tribeca Investment Partners in Sydney.

“And if anything, the higher taxes will likely limit future inflationary pressures and, in a strange way, might even help bond yields stabilize where they are.”

It is not clear whether the plan could wipe out Congress, as it received a frosty reception from Republicans, however, the scale of the proposed spending helped bring investors back to tech stocks overnight, and the Nasdaq rose 1.5%. [.NDX]

Biden’s plan includes a $ 174 billion investment in electric vehicles, and Tesla led the gains with a 5% jump, while Apple rose 1.9% and Microsoft raised 1.7%.

“We’re just seeing a little momentum in people taking over some of the areas that have been left behind, which is growth, and that will spill over into Asia.”

CHANGE OF FEELING

US markets ended the quarter with gains – the S&P 500 was up 5.8% and the Dow Jones up 7.8% over the three months – but the quarterly rise of 4.1% in global equities was the slower since the recovery began after the collapse of last March.

It came with growing concern over hiccups in the vaccine rollout and a new wave of coronavirus infections, particularly in Europe where, on Wednesday, France ordered a third nationwide lockdown.

The euro was punished as the pandemic reborn on the continent and clung to $ 1.1729 in Asia as investors waited for Friday’s U.S. labor market data to assess the growing gap in horse recoveries on the Atlantic Ocean.

There are also other signs of sentiment fragility and rising risk. The flop list of food delivery company Deliveroo, which fell by nearly a third on its London debut, is a far cry from the frenzy that has skyrocketed new economy American names Airbnb and DoorDash l ‘last year.

Investors are worried about the fallout from the incendiary sale of stakes by distressed asset manager Archegos Capital, which ransacked the affected shares and the shares of certain Archegos brokers, Credit Suisse and Nomura.

Australia’s fastest house price gains for more than three decades last month also underline some of the side effects of super-easy monetary policy, which may be prompting central banks to cut back support sooner than they do. had planned it.

Risk-sensitive currencies and commodities reflected caution, with the Australian and New Zealand dollars each falling around 0.2% on Thursday. Crude oil prices healed the losses overnight, with Brent futures rebounding around 0.5% to $ 63.03 a barrel and US crude up 0.6% to 59 , $ 52. [O/R]

Gold, which brings no income, was broadly flat after an overnight rebound above $ 1,700. Despite this, it suffered its worst quarter since late 2016 due to the hike in US rates.