US stock futures are pushing higher amid news reports that US President Donald Trump has officially signed off on a US$900 billion fiscal stimulus package, despite criticizing the bill just last week.

S&P 500 futures are attempting to create a larger gap above the psychologically-important 3700 line, with the spot index a mere 0.5 percent away from its highest-ever closing price, which was set on 17th December.

Should the optimism surrounding President Trump’s signing of this aid package hold over the coming days, it’s highly possible that the S&P 500 could post a new record high before 2020 is over.

 

Risk appetite spared from twin-negative-scenarios

Equity bulls are being heartened as two notably negative risks for markets were averted.

Firstly, President Trump’s approval of this Covid-19 aid package averts a US government shutdown while bringing some much-needed relief to millions of Americans. Also, it comes hot on the heels of a post-Brexit trade deal that was clinched between the UK and the EU just on Christmas Eve.

The prospects of a delayed US fiscal stimulus package and the disruptive effects from the much-feared no-deal Brexit had weighed on risk appetite. Now that those two major downside risks have all but diminished, risk assets should have little qualms pushing higher as they close out this remarkable year.

Asian stocks to ride on China’s successes

Asian stocks are also kicking off the final week of the year on a risk-on note. Japan’s Nikkei 225 is hovering around its highest levels since 1990, although the 27,000 handle may be just beyond the reach of equity bulls this year. Still, they can take plenty of heart from the near-13 percent year-to-date gain for the benchmark index for Japanese equities.

 

Likewise, the Hang Seng index may find its return to 27,000 elusive over the few trading days left in 2020, despite having breached that psychologically-important mark back in late November. However, Hong Kong's benchmark index remains more than six percent lower so far this year.

 

Still, Asian stocks can draw broad support from China’s continued economic recovery.

The November industrial profits in the world’s second largest economy, which was released on Sunday, grew by 15.5 percent compared to the same month last year. China’s superior ability to contain the Covid-19 pandemic suggests that it could become the world’s largest economy sooner than expected. According to the Centre for Economics and Business Research, China could leapfrog the US and lay claim to that prestigious title sometime within this decade, possibly by the year 2028, which is about five years earlier than the previous estimate.

China's growth prospects bode well for regional markets, while solidifying Asia’s role as the epicenter of global growth in the post-pandemic era.

 

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