Politicians’ inability to reach agreements on a new US stimulus and a post-Brexit trade deal weighed on equity markets on Thursday, while surging coronavirus cases continued to offset optimism about the rollout of vaccines.
Hopes US lawmakers could be close to a breakthrough in deadlocked talks helped fire a rally across Asian markets Wednesday after the White House proposed an economic rescue package that was bigger than a bipartisan plan put forward last week.
But House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer showed little enthusiasm and the two sides remain stuck on Republican demands for liability protection for businesses and the funding for state and local governments, which is sought by Democrats.
The need for a fresh package — after months of stalled talks — has been highlighted by spiking virus infections in the US, which has forced the reimposition of strict, economically painful containment measures.
“The hope is that Congress would by now have reached an agreement on a spending package to brace and bridge the gap for American households and businesses to when the majority of the population gets inoculated,” said Axi analyst Stephen Innes.
“Sadly, the fiscal fiasco has once again turned into a bit of a political blame game.
“The numbers are aligned for really the first time. It is now the composition where the sticking-points remain, and it’s pure politics right now.”
National Australia Bank’s Rodrigo Catril said: “An optimistic outcome would be that something is agreed next week while the prospect of no stimulus this year remains a high probability.”
– Britain, EU ‘remain far apart’ –
Still, the politicians remain hopeful, with Pelosi saying “one way or another we will get it done”, while Treasury Secretary Steven Mnuchin told reporters he was “cautiously hopeful we can get something over the finish line”.
All three main indexes on Wall Street fell, and most of Asia followed suit.
Tokyo, Hong Kong, Sydney, Seoul, Taipei, Singapore and Wellington were all in the red, though there were small gains in Shanghai, Manila and Bangkok.
There was a similar deadlock across the Atlantic, with British Prime Minister Boris Johnson and European Commission chief Ursula von der Leyen unable to find common ground in crunch talks on Wednesday.
After eight months of negotiations and with a just three weeks until a deadline on reaching a post-Brexit deal, the two sides are still stuck on a number of issues including fishing rights and rules for fair trade.
“We had a lively and interesting discussion on the state of play across the list of outstanding issues,” Von der Leyen said in a statement after the dinner at her Brussels’ headquarters. “We gained a clear understanding of each other’s positions. They remain far apart.”
The leaders agreed to further discussions by their negotiating teams “over the next few days” and that a “firm decision” should be taken by Sunday, a UK source said.
The pound dipped against the dollar and euro in Asian business.
– Key figures around 0230 GMT –
Tokyo – Nikkei 225: DOWN 0.3 percent at 26,728.97 (break)
Hong Kong – Hang Seng: DOWN 0.5 percent at 26,371.48
Shanghai – Composite: UP 0.1 percent at 3,375.34
Pound/dollar: DOWN at $1.3372 from $1.3394 at 2200 GMT
Euro/pound: UP at 90.38 pence from 90.14 pence
Euro/dollar: UP at $1.2085 from $1.2079
Dollar/yen: UP at 104.34 yen from 104.21 yen
West Texas Intermediate: UP 0.6 percent at $45.79 per barrel
Brent North Sea crude: UP 0.4 percent at $49.07 per barrel
New York – Dow: DOWN 0.4 percent at 30,068.81 (close)
London – FTSE 100: UP 0.1 percent at 6,564.29 (close)