Donald Trump and Joe Biden’s first presidential debate comes as the president comes under pressure following a report saying he had hardly paid any taxes for several years. ©AFP SAUL LOEB

Hong Kong (AFP) – Asian markets mostly rose Tuesday but investors struggled to extend a global rally as they weighed a fresh US stimulus proposal from the Democrats while looking ahead to the first presidential debate later in the day.

Bargain-buying and upbeat economic news from China provided support Monday but the ever-present spectre of the coronavirus and the reimposition of containment measures in several countries were keeping optimism at bay.

A major hindrance to further upside is the lack of movement on Capitol Hill in stimulus talks, with both sides digging in and making the chances of a new package unlikely before the November 3 presidential election.

Democrats put forward their latest offer, a $2.2 trillion bill that is more than $1 trillion off lower than their previous plan, which House Speaker Nancy Pelosi said “provides the absolutely needed resources to protect lives, livelihoods and the life of our democracy over the coming months”.

Pelosi’s spokesman said she had spoken to Treasury Secretary Steven Mnuchin on Monday and would talk again in the morning.

However, with Republicans offering to go only as high as $1 trillion — and hostilities exacerbated by the row over a replacement for Supreme Court judge Ruth Bader Ginsberg — hopes for a breakthrough are thin, despite millions of Americans struggling to cope with the economic impact of the virus.

“We definitely need another round of stimulus here, not only for confidence for the American public and workers, but also for the markets,” Michelle Connell, at Portia Capital Management, told Bloomberg Television.

“Going into this election, that would definitely help. I’d expect the markets to be weak, volatile, and have some downside here as we’re waiting to find out who our next president is.”

In early trade, Hong Kong and Tokyo were in negative territory along with Wellington and Manila, though Shanghai, Seoul, Singapore and Jakarta all posted nice gains. Sydney and Taipei were also up.

– Sterling builds on gains –

Tuesday sees the first debate between Donald Trump and Joe Biden, which will be closely watched as the president comes under pressure after a report at the weekend said he had paid barely any federal income tax for years.

But while Biden continues to lead in polls, AxiCorp’s Stephen Innes said: “Prediction markets show that Joe Biden’s lead over Trump has narrowed from +24 in late July to +10-6, depending on which cohorts you follow.

“A more convincing showing by the incumbent could drive concerns around negative US foreign policy implications for China.”

The imposition of new, lighter, lockdown measures is also keeping traders on their toes, with London and parts of northern England facing stricter rules, while France, Spain and Germany are also battling against a new surge in virus infections.

The moves are raising concerns that the tentative recovery from the near-global shutdown earlier in the year could be derailed.

However, a top International Monetary Fund official said the economic outlook was not as bad as it had previously feared.

“Recent incoming data suggests that the outlook may be somewhat less dire” than projected in the Washington-based crisis lender’s World Economic Outlook published in June, spokesman Gerry Rice told reporters, noting “parts of the global economy (are) beginning to turn the corner”.

On currency markets, the pound extended Monday’s rally on hopes for a breakthrough in post-Brexit trade talks between Britain and the European Union.

Despite Prime Minister Boris Johnson pressing ahead with a controversial bill that would override parts of a divorce treaty signed last year, European Commission chief Ursula von der Leyen insisted that a deal was still possible ahead of an EU summit on October 15.

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: DOWN 0.3 percent at 23,433.82 (break)

Hong Kong – Hang Seng: DOWN 0.2 percent at 23,424.49

Shanghai – Composite: UP 0.7 percent at 3,239.47

Pound/dollar: UP at $1.2844 from $1.2840 at 2110 GMT

Euro/pound: DOWN at 90.85 pence from 90.92 pence

Euro/dollar: UP at $1.1670 from $1.1664

Dollar/yen: DOWN at 105.52 yen from 105.56 yen

West Texas Intermediate: DOWN 0.6 percent at $40.34 per barrel

Brent North Sea crude: DOWN 0.6 percent at $42.18 per barrel

New York – Dow Jones: UP 1.5 percent at 27,584.06 (close)

London – FTSE 100: UP 1.5 percent at 5,927.93 (close)

Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.