Mnuchin Stimulus Offer Lifts Asia Equities

US stimulus proposal raises market optimism

The markets are digesting the latest development in the US fiscal stimulus battle. The newest proposal on the table is a USD916 billion stimulus proposal by US Treasury Secretary Mnuchin that includes some support for state and local governments.

The Mnuchin stimulus proposal, which came after New York markets closed, has lifted US index futures in Asia and pushed Asian stock markets higher. The proposal, which originated from the White House, and not the Democrats, is being perceived as having a better chance of making it past Senate Republicans.

Overnight, Wall Street edged higher, with the rising 0.28%, the climbing 0.50%, and the finishing 0.38% higher in a session dominated by cautious optimism. The futures on all three major indexes have surged higher this morning, the jumping 0.70%, the climbing 0.40%, and the e-minis rallying 0.55%.

The has flowed through into Asian markets with the jumping 1.10%, also powered by the Japan supplementary budget and positive data today. The is also enjoying outsized gains on US stimulus hopes, rising 1.35%.

In China, markets have managed to finally shrug off geopolitical nerves, with the edging 0.20% higher, and the rising 0.40%. The has recovered from a torrid start to the week, leaping 1.30% higher.

Regionally, Taipei has risen 0.20%, but ASEAN markets have taken renewed US stimulus hopes under their wings and risen strongly. Singapore has risen 0.50%, with Kuala Lumpur jumping 1.10% and Bangkok leaping 1.65% higher. Indonesia is closed for a public holiday. In Australia, markets are also solidly in the green. The and All Ordinaries are both 0.70% higher.

Equity markets should remain on a positive trajectory into Europe, although a Senate dismissal of the Mnuchin proposal would once again muddy the waters. However, any falls in equity markets are likely to be temporary with monetary policy and a vaccine-led recovery the longer-term games in town.

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