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  • Asian shares pare initial gains amid cautious optimism.
  • Yellen backed Biden’s stimulus plan but hints further hardships for China.
  • PBOC stood pat, likely to trim excess liquidity.
  • Inflation data from the UK, Europe and Canada can entertain traders but Biden’s inauguration becomes the key.

Asian equities pare early gains as traders turn cautious ahead of the key events during Wednesday. US Treasury Secretary Nominee Janet Yellen’s cover-up for Democratic stimulus initially offered strength to risks. Though, signals for competition to China and the latest coronavirus (COVID-19) updates seem to have derailed the mood off-late.

Against this backdrop, MSCI’s index of Asia-Pacific shares outside Japan gains over 0.6% to refresh the record top while Japan’s Nikkei 225 drops 0.55% by early Wednesday. Further, stocks in Australia and New Zealand remain mildly bid amid less virus-led negatives at home and a light calendar. Indonesia’s IDX Composite gains over 1.0% amid vaccine optimism but South Korea’s KOSPI and India’s BSE Sensex has a little back-up to cheer the rise and ease recent.ly. Additionally, Chinese shares trade mixed as the People’s Bank of China (PBOC) announced no rate change, as expected, while odds of further easing also recede.

Ex-Fed Chair Janet Yellen not only managed to save the $1.9 trillion aid package proposal but also signaled that US President-elect Joe Biden will be up for another relief package to support infrastructure investment in the next month. While justifying the need for the stimulus, the incoming official highlighted the need to combat the pandemic and record low rates. Though, her readiness to create an environment to challenge Beijing and US President Trump’s proposals tested the market optimism afterward.

Read: Janet Yellen: US must make investments to enable it to compete with China

It should also be noted that the New York Times shared the news of the US criticizing Chinese activity in Xinjiang and China’s counterargument suggests further Sino-American tension.

Elsewhere, covid numbers remain at worrisome levels in China, the UK and Japan while Germany’s extension of lockdown till February 14 also suggested virus woes aren’t out of the woods. Furthermore, news of the vaccine shortage in New York and Canada also weighed on the mood.

Talking about the economics, Aussie Westpac Consumer Confidence for January reversed the previous +4.1% gains with -4.5% but couldn’t disappoint Australian stock trades as domestic virus-led restrictions ease.

Looking forward, inflation data from the key economies may offer intermediate clues to the market players, likely requiring further easing. However, major attention will be given to what Joe Biden says in his first words as 46th President of the US.