US infrastructure agreement lifts Asian equities

The bipartisan US infrastructure agreement announced overnight lifted Wall Street, particularly growth stocks, flowing over into Asian markets today. Overnight, the S&P finished 0.58% higher, with the Nasdaq rising 0.69% and the Dow Jones outperforming, climbing 0.98%. The rally was fairly broad-based, with big-tech having a good day at the office, although markets were more focused on US infrastructure winners. Arguably, a massive investment in broadband would obviously benefit big-tech, so the package had something for everyone.

US index futures have continued their move higher today in Asia, with the S&P minis and Nasdaq futures slightly higher, but the shovel-heavy Dow futures jumping by 0.40%. That has green-lighted a broad rally in Asia, with the Nikkei 225 rising 0.75% and the Kospi climbing 0.70%. Mainland China’s Shanghai Composite has risen 0.45%, with the CSI 300 0.55% higher and the Hang Seng rallying by 1.0%.

Singapore is 0.30% higher, while Kuala Lumpur has climbed by 0.40%, and Taipei has risen by 1.0%, and Jakarta has shaken off a rapidly deteriorating Covid-19 situation to post a 0.50% gain. Both Australia and New Zealand remain on delta-variant Covid-19 tenterhooks today, with parts of wider Sydney also entering firmer lockdowns. That has not dented sentiment, though, with the ASX 200 rising 0.60%, the All Ordinaries by 0.50%, while Wellington has gained 0.30%.

It seems that where the US goes, so goes the world, particularly when Wall Street rises. That is certainly the case in Asia, where the US has given APAC 1.2 trillion reasons to be cheerful on the commodity, machinery and electronics exports front. Positive German data yesterday lifted Europe, and Europe and UK equities should get another infrastructure tailwind this afternoon. A higher US Core PCE Price Index tonight could introduce some inflation gremlins for Wall Street, but it would take a severe upside surprise and some Fed-speak to upset a positive finish to the week.