Asia Stocks Set for Muted Open Amid Stimulus Talks: Markets Wrap

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Asian stocks looked poised to track modest gains in the U.S. Wednesday as lawmakers continued to haggle over an aid package to bolster the economic recovery. The dollar weakened.

Futures were little changed in Japan, and edged up in Australia and Hong Kong. The S&P 500 bounced back from Monday’s selloff as House Speaker Nancy Pelosi continued to negotiate with the White House on a deal near $2 trillion. Tech shares mostly shook off the U.S. Justice Department’s decision to sue Google for allegedly abusing its power. Netflix Inc. plunged in late trading after it added fewer subscribers than predicted in the third quarter and issued a forecast that missed Wall Street estimates.

Elsewhere, Treasuries slumped, along with government bonds in Europe. Oil climbed above $41 a barrel.

In the latest developments, the White House has boosted its fiscal-stimulus offer in negotiations with Democrats, and House Speaker Speaker Nancy Pelosi said she’s hopeful for a deal this week. The administration’s offer is now $1.88 trillion, White House Chief of Staff Mark Meadows said on CNBC. Pelosi has pushed for $2.2 trillion along with a number of requirements for how the money should be deployed.

A rally built on stimulus hopes has investors weighing the chances of striking a deal against speculation that the looming election will prove too much of a hurdle to overcome. Yet with Federal Reserve policy makers urging for more fiscal support to complement unprecedented monetary aid, many in the market may be willing to let Pelosi’s deadline come and go.

“Equity markets are under some pressure following limited advances in stimulus talks,” Sebastien Galy, a senior macro strategist at Nordea Investment Funds SA, said in a note. “The odds of a deal being low, tells us much about the battle between hope and the reality of an economy still under severe shock but recovering.”

Amid a resurgence in coronavirus cases, European Central Bank President Christine Lagarde said the unexpectedly early pickup in infections is a “clear risk” to the economic outlook in the region. Europe’s leaders have intensified efforts to slow the contagion, reviving lockdowns in some areas after piecemeal curbs made little impact. New cases hit daily records in Germany and the Netherlands.

Here are some key events this week:

  • Brexit trade talks are likely to continue at least into next week if the U.K. and EU fail to reach an agreement.
  • The final presidential debate before the U.S. election, between President Donald Trump and former Vice President Joe Biden, will be live from Nashville, Tennessee on Thursday.

Here are some of the main market moves:

Stocks

  • The S&P 500 Index gained 0.5%.
  • Nikkei 225 futures were flat.
  • Australia’s S&P/ASX 200 Index futures rose 0.2%.
  • Hong Kong’s Hang Seng Index futures rose 0.2% earlier.

Currencies

  • The yen was little changed at 105.48 per dollar.
  • The offshore yuan rose 0.2% to 6.6642 per dollar.
  • The Bloomberg Dollar Spot Index fell 0.3%.
  • The euro rose 0.5% to $1.1824.
  • The British pound slipped 0.1% to $1.2933.

Bonds

  • The yield on 10-year Treasuries increased almost two basis points to 0.79%.

Commodities

  • West Texas Intermediate crude rose 1.5% to $41.46 a barrel.
  • Gold futures added 0.2% to $1,907.35 an ounce.

— With assistance by Vivien Lou Chen, and Todd White

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