Asian markets slip after rally on Biden inauguration

Sydney — Asian shares eased from record highs on Friday as investors took some money off the table after a recent rally that was driven by hopes a huge US economic stimulus plan by incoming President Joe Biden will help temper the Covid-19 impact.

“The markets had such a strong run yesterday after the presidential inauguration in the US and the run-up to that, that the lead coming in from the US is a bit messy,” said Shane Oliver, chief economist at investment manager AMP Capital in Sydney.

“A lot of the good news is out there. I suspect a fairly flat day.”

MSCI’s broadest gauge of Asia Pacific stocks outside Japan was off 0.2% at 722.49 points, a whisker away from its all-time high of 727.31 touched on Thursday.

The index has jumped 3.7% so far this week, reflecting relief over an orderly transition of power in the US and strong expectations that US stimulus will provide continued support for global assets.

Republicans in the US Congress have indicated they are willing to work with President Joe Biden on his administration’s top priority, a $1.9-trillion US fiscal stimulus plan, though some are opposed to the price tag.

Democrats took control of the US Senate on Wednesday, though they will still need Republican support to pass the programme.

Australia’s benchmark index was down 0.2% while Japan’s Nikkei eased 0.4%.

Chinese shares started on the back foot with the blue-chip CSI300 index down 0.1% and Hong Kong’s Hang Seng was off 0.1%.

Overnight on Wall Street, both the S&P 500 and Nasdaq Composite closed at record highs.

The Dow Jones Industrial Average eased a touch, falling into negative territory in the final minutes of trading.

In currency markets, the US dollar picked up against a basket of currencies after three straight days of losses. It is down 0.7% so far this week.

Against the Japanese yen, the dollar has slipped 0.25% this week.

The commodity-sensitive Australian dollar is up 0.6% while the euro has climbed 0.7% this week.

The single currency was flat even as European Central Bank (ECB) president Christine Lagarde warned about a renewed surge in Covid-19 infections and the prospect of prolonged restrictions that could challenge the region’s economic outlook.

The ECB, which kept interest rates steady on Thursday, also pledged to provide more support for the economy if needed.

The greenback’s recent slide has been led by investors ploughing money into higher-yielding currencies on optimism about a rapid economic recovery led by US stimulus.

Popular cryptocurrency bitcoin fell to an almost three-week low on Friday on profit-taking and worries about extra regulations.

In commodities, oil prices slipped after an unexpected build-up in US crude stockpiles.

Brent was off 23c at $55.86 a barrel while US crude inched 26c  lower to $52.86.

Spot gold was down 0.2% at 1,865.5/oz.

Reuters