World stock markets rose yesterday as Joe Biden took the oath of office, in part owing to the new US president’s coronavirus stimulus proposal.
Wall Street stocks pushed higher in midday trading, with the Dow gaining 0.6%.
In Europe, London’s FTSE 100 was up 0.4% to close at 6,740.39; Frankfurt’s DAX 30 rose:0.8% at 13,921.37, while Paris’ CAC 40 gained 0.5% at 5,628.44.
The pound hit a new 2.5-year peak against the dollar.
Asia had enjoyed a broadly positive session earlier in the day.
The euro sagged against the dollar meanwhile, as dealers mulled Italian political turmoil on the eve of an interest rate decision from the European Central Bank.
Biden’s inauguration as the 46th US president drew a curtain on the most tumultuous administration of modern times and set a new course to deal with Covid-19 and unite a splintered nation.
“European markets...(are) looking forward with optimism, with Joe Biden’s inauguration marking the end of a four-year period that married up both Brexit and global trade uncertainty,” commented IG analyst Joshua Mahony.
“With (former president Donald) Trump and Brexit negotiations in the rear-view mirror, markets are faced with a four-year stint of greater stability and less uncertainty.”
Investors set aside concerns over the coronavirus crisis for now – though Covid-19 continued to cast a shadow as governments kept lockdowns in place.
“The incoming administration is looking to hit the ground running and has some very ambitious plans to combat the pandemic and the economic damage it has inflicted,” remarked Craig Erlam, a market analyst at Oanda.
On Tuesday, US treasury secretary nominee Janet Yellen faced senators during her confirmation hearing and urged them to pass the new administration’s $1.9tn spending package.
She also reaffirmed Biden’s intention to maintain pressure on China.
Yellen told lawmakers that China was “our most important strategic competitor” and accused it of “undercutting American companies” by offering illegal subsidies, dumping products at below-market prices, stealing intellectual property and erecting barriers to US exports.
Secretary of State nominee Antony Blinken separately told senators that while he thought “Trump was right in taking a tougher approach to China...
I disagree very much with the way he went about it in a number of areas.”
The comments reflect an unusual area of common ground with outgoing president Trump, who during his term unleashed on China an aggressive and costly trade war that imposed billions of dollars in punitive tariffs.
But Yellen drew a line under key areas of difference, especially the Biden administration’s commitment to work with US allies rather than going it alone, and to promote investments to make American firms and workers more competitive against Beijing.
Responding to questions from the Senate Finance Committee at her Tuesday confirmation hearing, Yellen called China “our most important strategic competitor.”
She accused Beijing of “undercutting American companies” with a series of policies, including illegal subsidies, dumping of products, theft of intellectual property and barriers to US goods.
“We need to take on China’s abusive unfair and illegal practices,” she said, adding “we’re prepared to use the full array of tools” to address those issues.
Speaking the day before Biden is due to take office, she also vowed to be watchful of the national security concerns over China’s theft of “trade secrets” and “illegal efforts to acquire critical technology.”
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