Asia Stocks Hit Record High Over Higher Hopes Triggered By President Biden's Stimulus Package
By Erika Dee
Asian stocks hit a record high on Wednesday due to many factors. Included in the reasons why there is such a shift in the middle of a still ongoing pandemic are the upbeat earnings, better hopes of a large U.S. fiscal stimulus and a prolonged period of low interest rates.
Asian Stocks Hit Record High
These factors certainly fanned optimism about a global recovery from the pandemic, even if COVID-19 is yet to be driven away from this world.
European stocks are anticipated to open sharply higher. In particular, there are expectations that Euro Stoxx future will go up up 0.47% and Britain's FTSE futures will be trading 0.56% higher, as reported by Reuters.
MSCI's ex-Japan Asian shares index rose 0.86%, breaking above its January peak to reach its highest level ever.
China's CSI300 rose 2.1% to a 13-year high while Shanghai Composite hit a five-year high on the last trading day. This is quite timely, since these increases happen before the week-long lunar new year holidays.
On the other hand, Japan's Nikkei achieved gains of 0.19% while e-mini futures for the U.S. S&P 500 rose 0.35%.
Shares of Lyft Inc increased as high as11.8% while Twitter Inc climbed 3.5% in aftermarket trading.
"Globally investors are raising weightings on stocks as the Biden administration looks set to spend pretty much close $1.9 trillion on its stimulus," explained Norihiro Fujito, a chief investment strategist working at the Mitsubishi UFJ Morgan Stanley Securities.
Even though U.S. President Joe Biden's stimulus package faces opposition from Republicans, and has caused some ruckus, his fellow Democrats got his back. Last week, the Democrats approved a budget outline that will enable them and the President to rally for the stimulus through in the coming weeks even if the Republican support is largely absent.
Will the Stimulus Package Push Through?
At present, there is a more resounding support for the stimulus to happen.
For one, even Treasury Secretay Janet Yellen said on Sunday that if the stimulus pushes through, the US will be far better off.
According to her, the U.S. could return to full employment in 2022 if the $1.9 trillion coronavirus rescue package is passed.
"There's absolutely no reason why we should suffer through a long slow recovery," Yellen said in a CNN interview. "I would expect that if this package is passed that we would get back to full employment next year," she added.
Long-term unemployment is nearing a historical peak almost a year since the pandemic started.
Yellen added that whatever Republicans are concerned with, making them resistant to the stimulus package being passed are likelier to be smaller than the actual hardships people are already suffering from because of the pandemic.
"We have people suffering ... through absolutely no fault of their own," Yellen said. "We have to get them to the other side and make sure that this doesn't take a permanent toll on their lives."