Asian shares extend gains on Thursday following the Federal Reserve’s statement that it was too early to consider rolling back emergency support for the economy. Additionally, U.S. President Joe Biden’s proposal of a $1.8 trillion stimulus package.
In a speech to a joint session of Congress on Wednesday, Biden proposed the sweeping new $1.8 trillion plan. He pleaded with Republican lawmakers to work with him on divisive issues. The U.S. president has also asked them to work with him to meet the stiff competition posed by China.
Moreover, in his maiden speech to Congress, he made an impassioned plea to raise taxes on corporations and rich Americans to support his “American Families Plan”. He proposed to nearly double the tax on investment income. This knocked stock markets last week.
According to Stephen Dover, Franklin Templeton’s chief market strategist in California, the effect of the tax package on markets is hard to measure for now.
Stocks on The Move
FTSE futures advanced 0.15% and E-mini futures for the S&P 500 index added 0.53%. In addition, Nasdaq futures advanced 0.87%, all pointing to a likely higher open for European and U.S. markets.
MSCI’s broadest index of Asia-Pacific shares outside Japan began making gains early. They gained 0.46% by mid-afternoon.
In Australia, high oil prices lifted energy stocks, and S&P/ASX 200 climbed 0.24%.
In China, the blue-chip CSI300 index was 0.45% higher. The Hang Seng index of Hong Kong rose by half a percentage point.
In Seoul, KOSPI was unchanged, while Taiwan shares edged up 0.17%. In Japan. markets were closed for a holiday, but Nikkei futures crept 0.35% higher to 29,055 points.
Investors await the first estimate of the U.S. GDP Q1, which should come at 13:30 GMT.
On Wednesday, Fed Chair Jerome Powell said that it is not time to discuss any policy change. That’s after the U.S. central bank left interest rates and its bond-buying program unchanged, he said. And despite taking a more optimistic view of the country’s economic recovery, he added.
John Milroy, the investment adviser at Ord Minnett, said that excerpts of Biden’s speech released in advance by the White House hit the high points: big infrastructure spends, talking climate action, and vaccines. He added that the Fed remains dovish, all very supportive.
On Wednesday, Apple Inc posted sales and profits ahead of Wall Street expectations. That was with a warning, though, that a global chip shortage could dent iPad and Mac sales by several billion dollars. This led to a boost in tech shares.
Wall Street ended lower, the Dow Jones Industrial Average dropped 0.48% to end at 33,820.38 points, and the S&P 500 fell 0.08% to 4,183.18.