Asian market rally stalls but vaccine, stimulus hope lend support

HONG KONG  —  Asian markets slipped on Thursday as investors took a breather after a broad three-day rally, though upbeat data, stimulus hopes and signs of improvement on the virus and vaccine fronts continue to provide strong support.

An upbeat outlook for the global economy continues to push oil prices higher, with top producers sounding a note of optimism for demand this year as lockdowns are eased and activities slowly resume.

Equities around the world have surged this week after last week's rout, with traders also breathing a sigh of relief that the social media-driven buying frenzy, which hammered major investors, had died down for now.

Joe Biden pledged on Wednesday not to reduce the cash handout included in his $1.9 trillion stimulus proposal but in a bid to get bipartisan support for the package, he did say he was willing to narrow the parameters for qualification.

The move comes after Republicans put forward a plan that was less than a third of Biden's spending package and had much lower handouts.

The president said he expects "some" Republican support but urged Democrats, some of whom have reservations about the size of the bill, to stay united.

His press secretary Jen Psaki added that Biden was listening but would not bend much or wait long.

"It's important to work with many Republicans and Democrats who fall in different parts of the political spectrum," she told reporters, promising that any suggestions would be considered if they "improve" the bill.

Democratic House Budget Committee Chairman John Yarmuth told lawmakers: "We have the plan and the ability to do this. And, thankfully, we can also afford to do it.

"Interest rates and inflation are at historic lows -- lower today than even before the pandemic -- and the return on smart investments in the economy have never been higher."

Optimism that a new, huge US spending package was on the horizon -- along with vast central bank support -- has helped fuel a surge in world markets as traders respond positively to any sign it will get passed.

 'Economy regaining serious momentum' 

But they were unable to push this week's rally into a fourth day, with most markets in the red following a tepid lead from Wall Street.

Tokyo, Shanghai, Sydney, Seoul, Singapore, Taipei, Manila and Wellington all fell, though the losses were limited, while Hong Kong and Jakarta were slightly higher.

Sentiment continues to be buoyed by a pick-up in vaccinations, particularly in the United States and Britain, while infection and death rates are also falling, giving hope that economically painful containment measures can begin to be lifted soon.

There was also cheer from data showing US private jobs creation rose more than three times quicker than expected last month, instilling confidence for the release of government employment figures on Friday.

"There has been a tonne of noise in the stock market these past few weeks, so it's encouraging to see solid economic reads," said Mike Loewengart, at E*Trade Financial Corp. 

"There may be signs of overextension when it comes to single stocks, but under the surface there is an economy regaining serious momentum."

Top Federal Reserve officials added to the upbeat mood, saying the world's biggest economy was on track for a recovery but the bank would not consider tightening monetary policy for some time.

"We are still in the middle of a crisis, so it's too early to initiate that discussion," St. Louis Fed President James Bullard said, adding later that he thought the jobs recovery was much better than after the global financial crisis a decade ago. 

Other regional bosses also said they were happy with the current state of affairs.

Oil prices rose again, consolidating at more than one-year highs, on growing demand hopes as immunisation programmes progress, while OPEC and other major producers said they were confident in a global economic recovery.

In a statement after a key policy meeting, the group said all participants were "optimistic" for a "year of recovery in 2021".

"The gradual rollout of vaccines around the world is a positive factor for the rest of the year, boosting the global economy and oil demand," the statement said.