Markets rise amid signs that Democrats could pass the package without Republican support
Wall Street stocks finished sharply higher overnight, as market players were encouraged by the prospect of more fiscal aid from Congress, gathering pace of vaccines, and fairly upbeat corporate earnings while the panic related to heavily shorted stocks like GameStop Corp. abated. As a result, the S&P 500 index rose 1.39%, the Dow Jones Industrial Average gained 1.6%, and the tech-heavy Nasdaq Composite rallied 1.6%.
Asian equities were mostly positive on Wednesday as vaccine roll-out programs accelerated across the globe. Markets also rose due to renewed hopes for Biden’s aid bill amid some signs that Democrats could pass the proposed package without Republican support. As such, Tokyo’s Nikkei 225 rose 1.0% and the Kospi in South Korea edged 1.06% higher. Australia’s S&P/ASX 200 surged 0.92%, the Hang Seng in Hong Kong gained 0.25 while the Shanghai Composite index bucked the trend, shedding nearly 0.5% during the session.
In Europe, stocks started the day on a firmer footing on the more positive risk backdrop. Leading the gains, Italy’s FTSE MIB is rallying as much as 2.25% on news that former ECB President Mario Draghi is set to form a government in Italy. The pan-European Stoxx 600 climbed 0.8% in early trade.
Meanwhile, the dollar retains a bullish tone following the recent rally to two-month highs versus the euro amid expectations of a more rapid economic recovery in the United States as compared to the Eurozone. EURUSD has barely held above the 1.2000 figure yesterday while keeping a slight bearish bias on Wednesday as traders await US ADP employment data due later today.
Elsewhere, oil prices set fresh one-year highs above $58 in recent trading amid positive risk sentiment and upbeat API report that pointed to a 4.4-million-barrel decline in the US crude oil inventories. However, the futures could proceed to a bearish correction if the upcoming EIA data reflect a rise in stockpiles. A stronger dollar could cap further gains in oil prices as well.