Asia stocks rise on hopes for Trump health and stimulus

Global stocks moved higher on Monday following reports that President Donald Trump could be discharged from hospital later in the day and US lawmakers were making progress in negotiations on new stimulus measures.

European bourses were in the green in early trading, with the region-wide Stoxx Europe 600 gaining 0.6 per cent, while Germany’s Dax and the UK’s FTSE 100 were both up 0.4 per cent. Asian stocks also rose, while futures contracts tipped US equities to move higher when Wall Street opens later in the day.

Investors were emboldened by potential positive news on Mr Trump’s health and the prospect of new fiscal stimulus measures in Washington. The president’s medical team said he could be discharged from the Walter Reed military hospital as early as Monday, despite receiving treatment reserved for severe Covid-19 cases.

The upbeat trading followed a choppy week for stocks as investors digested the news of rising coronavirus infections and the US president’s diagnosis just weeks ahead of the presidential election.

Traders will be closely watching a slew of eurozone economic released later on Monday for signs of whether the recovery is slowing. In the face of a record fall in eurozone core inflation, analysts said they expected the European Central Bank to expand its emergency bond-buying programme.

“The euro area recovery has slowed notably as new Covid-19 cases have surged, core inflation has fallen to a new low and ECB officials have signalled increasing discomfort with the inflation outlook,” said Sven Jari Stehn, senior economist at Goldman Sachs. Further quantitative easing is likely to be announced at the December meeting, he added.

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Armin Peter, global head of debt syndicate at UBS, said the factors driving the market remained broadly the same as last week: continued Brexit negotiations, rising coronavirus infections, the US election and hopes for further stimulus measures in the US.

Futures markets implied the blue-chip S&P 500 index would rise 0.5 per cent when Wall Street opens later, while the tech-heavy Nasdaq 100 was poised to rise 0.8 per cent.

Oil prices also rose with Brent crude, the international benchmark, gaining more than 2 per cent to reach above $40 a barrel. Oil prices slipped last week on fears of slowing demand in the face of the worsening pandemic.

On Sunday, the Democratic speaker of the House, Nancy Pelosi, told the CBS television network that lawmakers were “making progress” on a coronavirus support package to restore some of the expanded US unemployment benefits that were cut off at the end of July.

While Democrats in the House on Thursday passed a $2.2tn stimulus package, Republicans and the White House have signalled resistance to the scale of the bill. Mr Trump on Sunday issued a call on Twitter for negotiators to “work together” and complete a stimulus deal.

“The bigger catalyst for us today is the potential that the [stimulus] deal goes through,” said Andy Maynard, a trader at China Renaissance. “That is the thing that’s boosting people’s ability to put money to work”.

Mr Trump’s diagnosis is likely to “disrupt his re-election campaign agenda and dampen his chances of winning the election”, said Ken Cheung, chief Asian currency strategist at Mizuho Bank.

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That could be positive for the Chinese currency if victory for Joe Biden in November results in a cooling off in US-China tensions, Mr Cheung added.

In Asia-Pacific equities, Japan’s benchmark Topix index gained 1.7 per cent and Australia’s S&P/ASX 200 climbed 2.6 per cent. Chinese markets remain closed for a holiday.

Additional reporting by Daniel Shane in Hong Kong



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