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Tech shares lead U.S. stocks to all-time highs

EconJan 22. 2021

By Syndication Washington Post, Bloomberg · Cecile Gutscher

The advance in U.S. stocks stalled with major indexes at or near records, though tech shares continued to march higher on anticipation that more fiscal spending will revive economic growth and bolster corporate earnings. The dollar weakened.

The S&P 500 Index was little changed at noon in New York, after closing at an all-time high. Risk appetite has gotten a boost from President Joe Biden’s push for nearly $2 trillion in additional spending and plans to jump-start a federal response to the pandemic. Benchmark Treasury yields remained higher after initial jobless claims posted a small decline.

In Europe, tech firms led gains, with the Stoxx 600 Index touching its highest level in 11 months. The euro held an advance after the European Central Bank left rates unchanged and affirmed the size of its pandemic purchase program at $1.2 trillion (1.85 trillion euros).

The MSCI World Index reached an intraday record on Thursday as investors look forward to increased economic support to battle the pandemic. ECB President Christine Lagarde warned the virus continues to pose a serious risk after policymakers voted to keep pumping unprecedented amounts of stimulus into the economy. In the U.S., Biden is seeking a $1.9 trillion fiscal package that’s already drawn criticism from several Republican senators.

“High valuations could find justification in the strong recovery that we expect, while inflation assets remain in the affordable zone,” according to Florian Ielpo, head of macroeconomic research and multi-asset portfolio manager at Unigestion SA. “We therefore see 2021 as a land of investment opportunities.”

Meanwhile, fresh tensions surfaced between U.S. companies and Beijing. China’s three biggest telecommunications firms said they requested a review of the New York Stock Exchange’s decision to delist their shares. Separately, Twitter Inc. locked the official account of the Chinese embassy to the U.S., citing a violation of its “dehumanization” policy.

On the virus front, global fatalities hit a daily record, with a U.K. official comparing some hospitals there to a “war zone.”

These are the main moves in markets:

Stocks

The S&P 500 rose less than 0.1% as of 4 p.m. EST.

The Nasdaq 100 Index added 0.8%.

The Stoxx Europe 600 Index ended flat.

The MSCI Asia Pacific Index rose 0.7%.

The MSCI Emerging Market Index gained 0.6%.

Currencies

The Bloomberg Dollar Spot Index declined 0.2%.

The euro jumped 0.4% to $1.2158.

The British pound gained 0.5% to $1.372.

The onshore yuan was little changed at 6.461 per dollar.

The Japanese yen was little changed at 103.54 per dollar.

Bonds

The yield on 10-year Treasurys gained three basis points to 1.11%.

The yield on two-year Treasurys fell one basis point to 0.12%.

Germany’s 10-year yield climbed three basis points to -0.496%.

Japan’s 10-year yield dipped one basis point to 0.043%.

Commodities

West Texas Intermediate crude declined 0.3% to $53.13 a barrel.

Brent crude was little changed at $56.11 a barrel.

Gold futures rose 0.1% to $1,871.90 an ounce.

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Thailand hopes for 4% growth in US exports this year: DITP

EconJan 22. 2021Department of International Trade Promotion (DITP) director-general Somdet Susomboon

By The Nation

Thailand is targeting a 4 per cent growth in exports to the US this year, Department of International Trade Promotion (DITP) director-general Somdet Susomboon said.

Products with good growth potential include supplementary food, medical products and goods that can be used to work from home.

He added that US President Joe Biden’s trade policy is to not just lower dependence on foreign goods and strengthen domestic industries, but also to lure companies to bring their manufacturing facilities back to the US.

Thailand should closely monitor Biden’s fiscal and monetary policies, which will have an impact on the baht, he said.

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Almost 5m workers hit by delayed economic recovery after new Covid wave: BOT

EconJan 22. 2021Chayawadee Chai-Anant, senior director in the BOT economic and policy department. File photo

By The Nation

The new wave of Covid-19 will delay Thailand’s economic recovery and affect 4.7 million workers, a senior official at the Bank of Thailand (BOT) has warned.

Chayawadee Chai-Anant, senior director in the BOT economic and policy department, said though the second wave of infections is not as severe as the first, it would still delay economic recovery to pre-crisis levels – possibly till late next year. 

“The recovery will be a K-shaped, not V-shaped, but if government measures are effective, it will be close to a V-shape recovery,” she told a seminar hosted by the World Bank yesterday.

The government has limited lockdowns and restrictions to specific locations after the fresh outbreak in December, while also launching new aid measures that are smaller in scale than in the first virus wave early last year.

The Thai economy showed signs of recovery in the third quarter last year, but the second wave of infections has disrupted that trend.

“Thailand’s economy could return to pre-crisis level in mid-2022, or the recovery may be delayed to late of 2022,” said Chayawadee.

Tourism-related sectors such as restaurants, hotels and transport would feel the brunt of the new outbreak as they have yet to recover from the first wave, she added.

The second wave will hit 4.7 million workers hard, costing either their jobs or reducing their hours along with their income, according to an initial assessment by the central bank and business sectors.

Chayawadee said three key factors needed to be closely monitored.

The first factor is how long the pandemic will last. Second is the effectiveness of government aid measures, and third is how Thailand will open the country to foreign arrivals. Linked with the third factor is the scale of vaccination in the country.

Tourism-related industries are now facing surplus capacity in transport and hotels after tourist arrivals fell to around 7 million, from 40 million before the pandemic. New aid measures must be targeted to reach people in need, she said.

Somprawin Manprasert, chief research economist at Krungsri Bank, said the urban poor are facing the biggest impact from Covid-induced crisis, while high-income groups have been only slightly affected. “The government does not have adequate policy tools to deal with the Covid fallout,” he added.

Pisit Puapan, executive director of the Fiscal Policy Office’s macroeconomic policy bureau, insisted the government has adequate financial resources to deal with economic impact. Thailand’s fiscal position is relatively strong given public debt was only 42 per cent of GDP as recently as 2019, he said. However, he acknowledged that this figure is now climbing, with Thai public debt now close to 60 per cent of GDP.

The government has set sustainable debt-to-GDP at 60 per cent, but that limit could be raised in the future if the country needs to spend more on productive projects, he said.

The World Bank projects the Thai economy will rebound to 4 per cent growth this year and up to 4.7 per cent next year, from an estimated 6.5 per cent contraction last year.

Birgit Hansl, World Bank country manager for Thailand, has called for more women to join the workforce. Thailand should also increase labour productivity, given the country is becoming an ageing society, she said.

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Thailand can expect 4-5% growth this year, says Finance Minister

EconJan 22. 2021Finance Minister Arkhom Termpittayapaisit

By The Nation

The Thai economy should expand by 4 to 5 per cent this year, Finance Minister Arkhom Termpittayapaisit said on Thursday at the World Bank’s Thailand Economic Monitor event.

Related story: Thai economy to see 4% growth this year, says World Bank, but warns of downside risks

He said the government has launched several economic stimulus measures and hopes the upcoming vaccine will also help revive the economy after the Covid-19 fallout.

Despite this year’s better outlook, the government will continue pushing economic growth by driving digital, eco-friendly as well as health sectors, he said.

The government is also restructuring the taxation system to ensure the country has sustainable revenue, the minister added.

The Cabinet on Tuesday approved the new “RaoChana” (WeWin) cash-handout scheme and another round of “Khon La Khrueng” (Let’s Go Halves) co-payment scheme, aiming to ease the burden on people hit by the new wave of Covid-19 infections.

Arkhom said on Wednesday that the new WeWin scheme and the first two phases of the Let’s Go Halves scheme should boost the economy by 1 per cent.