Investing.com – Asia Pacific stocks were mostly up on Friday morning, despite the growing dispute between U.S. Treasury Secretary Steven Mnuchin and the Federal Reserve over funds earmarked to help businesses, nonprofits and local governments overcome the COVID-19 impact.
In a letter to Fed Chairman Jerome Powell, delivered after markets closed on Thursday, Mnuchin sought to end the central bank’s relief programs by requesting the re-appropriation of some $455 billion allocated to Treasury under the CARES Act earlier in the year.
The move could see these programs, viewed as vital to economic stability, end by Dec. 31.
“The White House wants to pull the unused portions back so Congress can spend the money elsewhere, while the Fed is pushing back … indeed, this does not help the push-pull tug of war around short-term versus long-term markets narrative at a time when it is important that all levels of government, including the Fed, at least put up the pretense of a unified front,” Axi global chief market strategist Stephen Innes told Reuters.
U.S. shares had rallied before Mnuchin’s announcement, after Senate Democratic Minority Leader Chuck Schumer said Republican Majority Leader Mitch McConnell had agreed to revive negotiations to craft “a real good COVID-19 relief bill.” A mid-afternoon meeting on Thursday among congressional aides reportedly discussed efforts to pass a $1.4 trillion bill to keep government agencies operating beyond Dec. 11, when current funding is set to expire.
“A meaningful stimulus package will aid small companies, the underlying economy, as well as the unemployed and people most at need … and there might be less of an inclination for cities to shut down,” Great Hill Capital chairman Thomas Hayes told Reuters.
Although the news saw U.S. shares tumble, Asia continued to avoid big moves.
Japan’s Nikkei 225 were down 0.71% by 10:30 PM ET (2:30 AM GMT). South Korea’s KOSPI inched up 0.03%, even as Prime Minister Chung Sye Kyun urged citizens to stay home and cancel gatherings after new COVID-19 daily cases exceeded 300 for a third day.
Meanwhile, the number of COVID-19 cases continues an incessant rise globally. U.S. COVID-19 hospitalizations jumped nearly 50% during the last two weeks, with lockdowns in some cities and states threatening the U.S economic recovery. Data released on Thursday showed 742,000 U.S. jobless claims for the week, above the 707,000 claims in forecasts prepared by Investing.com and the previous week’s 711,000 claims.
The International Monetary Fund and Group of 20 nations also issued a warning that the fresh restrictions on households and companies due to the resurgence of COVID-19 globally is a risk to the economic recovery.
President-elect Joe Biden expressed frustration at incumbent President Donald Trump’s administration, which has been un-cooperative in the transition process leading up to the inauguration ceremony. The lack of help has hindered his team’s ability to get accurate COVID-19 data, Biden said.
However, some investors warned of continued volatility ahead.
“There’s the push-pull of short-term versus long-term and that’s what investors are looking at right now … there are some very serious risks in the short term, especially with the lockdowns,” TIAA Bank president of world markets Chris Gaffney told Bloomberg.