Wall Street had another positive session overnight, but a few swirling doubts have crept into Asian markets, with equities across the region indicating that regional investors prefer caution as the week closes. Hong Kong has announced a complete lockdown of part of Kowloon this morning in its COVID-19 battle. The “Jack’s Back” Alibaba (NYSE:) rally appears to have run out of steam as well, with Ant Financial’s value rapidly being recalculated downwards as the Chinese government tightens the screws on its parent company.
Downunder, Alphabet (NASDAQ:) is threatening to withdraw its search functions from Australia as the row over proposed laws forcing tech giants to pay for news content escalates. Given that Australia has stared down China threats and restrictions, Google may find itself playing with fire. The UK Times reports that a senior Japan government official has conceded privately that this year’s delayed Olympic Games will likely be cancelled.
In Singapore, rising property prices have raised speculation that authorities will impose new price control measures to limit increases. That is likely to weigh on Singapore equities over the next few days, given that most of the Straits Times Main Index are made up of banks and property companies of one guise or another.
Over in the United States, President Biden has been busy, issuing a flurry of executive orders, some of which have been aimed at US big oil. That probably explains quite a bit of the underperformance overnight. More notably, the hoped-for bipartisanship in the US Senate appears to be showing the cracks of reality already. Reuters is reporting that the President’s immigration reforms are facing resistance already.
Additionally, the Democrat and Republican Senate leaders are bickering over a power-sharing agreement in the 50-50 Senate. The critical issue is the Republican wish to retain the filibuster. A delaying procedure that shifts the votes required to pass legislation in the Senate to 60 votes. Depending on your point of view, this is either a check and balance on government or a cancer that gives outsized power to the opposition and prevents anything meaningful from being enacted by the government. As I have previously highlighted, the filibuster, reconciliation and the Byrd Rule are a critical danger to the Democrat plans, and by default, the “buy everything” stimulus trade. They are all different faces of essentially the same 60-vote required majority. A lame-duck presidency could see an emotional correction across financial markets everywhere.
It has all added up to a more cautious tone in Asia, with nothing of note on the Asian data calendar after Australian and Japan and Jibun PMI’s had zero market impact this morning. While Asia had sounded caution today, the US fiscal stimulus package continues to be the one ring that rules them all with markets, despite cracks appearing at the sides.