SHANGHAI: Asian shares rose on Friday and a gauge of global equities edged closer to record highs after US President Joe Biden embraced a bipartisan Senate infrastructure deal, raising hopes for an extended rebound in the world's largest economy.
Investors have been looking to an infrastructure agreement to extend the US recovery after massive fiscal stimulus helped the US economy grow at a 6.4 per cent annualised rate in the first quarter. The plan is valued at $1.2 trillion over eight years, $579 billion of which is new spending.
Futures pointed to a higher open for share markets in Europe. Pan-region Euro Stoxx 50 futures added 0.18, DAX futures rose 0.16 per cent and France's CAC 40 futures were up 0.17 per cent. FTSE futures edged 0.03 per cent higher.
"The positive market tone recognises the potential growth benefits of the compromise, but with the smaller size tempering some of the tax implications to pay for it," said Kerry Craig, global market strategist at J P Morgan Asset Management.
Securing bipartisan agreement on the deal required Biden to sacrifice some of his original ambitions on schools, climate change mitigation, and support for parents and caregivers, as well as tax increases on the rich and corporations.
"We continue to expect progress on further fiscal stimulus in the months to come and the larger size of those packages will likely necessitate rising taxes, especially if they come via the US Congressional budget reconciliation process rather than partisan support," said Craig.
MSCI's broadest index of Asia-Pacific shares outside Japan rose nearly 1 per cent, as Chinese blue chips rallied 1.84 per cent. MSCI's all-country index rose 0.21 per cent, putting it less than 0.3 per cent below a record high touched on June 15.
Hong Kong's Hang Seng added 1.38 per cent, Seoul's Kospi was up 0.44 per cent and Australian shares climbed 0.45 per cent. Japan's Nikkei rose 0.66 per cent.
Asian stocks rebounded after falling earlier in the week amid concerns of earlier-than-expected policy tightening by the US Federal Reserve, after it signalled higher rates in 2023 last week.
"The reality remains that the timing of any tapering scare, or indeed tapering, is most likely to be driven by market-driven inflation expectations. And the pressure on this front has eased of late," Christopher Wood, global head of equity strategy at Jefferies, said in a note.
Overnight, the S&P 500 gained 0.58 per cent and the Nasdaq Composite added 0.69 per cent, lifting both indexes to record high closes. The Dow Jones Industrial Average rose 0.95 per cent.
In the currency market, the dollar index was down about 0.1 per cent at 91.764 as investors continued to weigh the likelihood of Fed tightening in the face of persistent inflation.
The Japanese yen edged higher to 110.84 and the euro gained 0.07 per cent to $1.1938.
Benchmark 10-year US Treasuries, which saw yields dip after Biden's announcement of an infrastructure bill were last at 1.4952 per cent, up from a close of 1.487 per cent on Thursday.
Yields on the 30-year bond were barely higher at 2.098 per cent from 2.095 per cent on Thursday.
Oil prices ticked up to near three-year highs, supported by drawdowns in US inventories and accelerating German economic activity. US West Texas Intermediate crude rose 0.14 per cent to $73.40 per barrel and global benchmark Brent crude was at $75.65, up 0.12 per cent on the day. Spot gold was up 0.11 per cent at $1,777.09 an ounce, on track for its first weekly rise in four. - Reuters
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