Biden bounce peters out for Europe stocks

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Joe Biden takes the oath of office during the 59th presidential inauguration on Saturday at the US Capitol in Washington, DC. AFP

European stock markets’ bounce from Joe Biden taking office as US president petered out on January 21.

Attention switched to the European Central Bank (ECB), which was to meet on January 21 to take stock of their monetary stimulus efforts as more infectious strains of the coronavirus and stricter shutdowns cloud the eurozone economic outlook.

 

The euro hit a six-month low versus sterling, with the British currency buoyed by the UK’s early vaccine rollout, analysts said.

The stronger pound, which also hit a 2.5-year high versus the dollar, weighed on London’s benchmark FTSE 100 index featuring multinationals earning in the US unit.

Oil prices were knocked off course by Biden’s greener credentials compared with former President Donald Trump, according to traders.

Asian stock markets made solid gains on January 21, as the new president prepared to unveil plans on tackling the coronavirus crisis.

Biden on January 20 signed a flurry of executive orders, starting with rejoining the 2015 Paris climate accord.

The orders included keeping the US in the World Health Organisation, a move observers say will help in the fight against the devastating disease.

 

Wall Street hit record highs January 20 as Biden took the helm and looks to push through a $1.9 trillion relief package for the world’s top economy.

This has offset concerns about his plans for higher taxes and market regulation.

In Europe, ECB policymakers are expected to stop short of taking fresh action after ramping up their pandemic support last month.

The Bank of Japan on January 21 revised its growth outlook upwards for the next two years and maintained its ultra-loose monetary policy, while warning that the pandemic made it harder to establish clear forecasts.

In Asia on January 21, Hong Kong closed slightly lower on profit-taking after five days of gains, having earlier in the day breached 30,000 points for the first time since April 2019.

Mumbai topped 50,000 points for the first time, meanwhile.

Axi strategist Stephen Innes said: “The consensus view now [is] that . . . Biden’s early focus will be more on growth than tax hikes

“The market is also seeing through longer lockdowns on the premise that Covid vaccinations will lead us out of the pandemic quickly.”