Equity Markets Take Positive Lead From Record Highs In US

Asia-Pac equity indices took their lead from the U.S., rising on Tuesday amid broad risk on sentiment after the US coronavirus relief bill progressed. Major bourses in the US hit record highs on Monday.

• Risk on sentiment was boosted after U.S. President Trump signed off on the coronavirus relief bill, with liquidity thinned out in the festive season. The news that U.S. Pres-elect Biden is planning to invoke the Defense Production Act to boost the production of Covid-19 jabs lent further support to risk appetite.
• Markets are now assessing the chances of the coronavirus relief package making it through the Senate. Current indications are that the Republican controlled Senate will not support the increased amount, casting further uncertainty on the process.
• Despite this uncertainty most Asia stock markets posted decent gains, the Nikkei outperforming as the bourse hits the highest levels in 30 years and climbs over 27,000.Optimism is tempered by coronavirus concerns. Hospitalisations in the U.S. reached new highs, while other countries including Indonesia and Taiwan have increased containment measures and Germany is seeking to expand vaccine production to help the inoculation programme in Europe. This was evident in South Korea where the Kospi fell 0.29% after South Korea reported the biggest daily death toll so far.
• Markets in China have struggled compared to peers, some caution in the region evident after China said it opposed the U.S.'s Taiwan assurance act which was signed on Sunday.