US stocks have fallen after President Joe Biden said China was poised to “eat our lunch”, a warning that raised concerns for a market trading around record highs on hopes of more stimulus, strong earnings and an improving outlook for the pandemic.
Mr Biden told a bipartisan group of US senators that North America needed to upgrade its infrastructure in the face of the challenge from China.
“They’re investing in a lot of money, they’re investing billions of dollars and dealing with a whole range of issues that relate to transportation, the environment and a whole range of other things,” Mr Biden said.
Mr Biden made the comments after a two-hour phone call on Wednesday with Chinese President Xi Jinping.
In addition, the Congressional Budget Office said the US Government was looking at a $US2.3 trillion ($3 trillion) deficit this year, down around $US900 billion from last year, because of the record stimulus to combat the coronavirus pandemic.
The major indexes were mixed in late trade after record highs yesterday.
At 7:30am AEDT, the Dow Jones index was down 0.1 per cent to 31,403, the S&P 500 fell 0.7 per cent to 3,909, and the Nasdaq put on 0.2 per cent to 14,007.
Edward Moya, senior market analyst at OANDA in New York, said the warning about China and Democrat plans to lift the minimum wage to $US15 in a $US1.9 trillion stimulus package showed headwinds could be on the rise.
Mr Moya said Mr Biden’s first call since coming to office with Mr Xi “resurfaced all of the difficulties that we’re going to face this year in addition to the pandemic”.
He said disputes within the Democratic Party about the minimum wage was also dragging out stimulus talks.
Bank of New York Mellon rose after saying it had formed a new unit to help clients hold, transfer and issue digital assets, sending Bitcoin up more than 8 per cent to a record high of $US48,481.
Payment companies jump on bitcoin surge
A 0.8 per cent rise in PayPal to $US285.37 helped information technology become the only the only sector on the S&P 500 and Nasdaq to rise.
The technology sector and semiconductors hit record highs, while economy-linked energy and industrials stocks fell back.
Mastercard rose after the credit-card company said it was planning to offer support for some cryptocurrencies on its network this year, joining a string of big firms that have pledged similar support.
Job claims fall
The number of Americans filing new applications for unemployment benefits dropped to 793,000 last week, compared to 812,000 in the week before.
That’s well below the record 6.9 million reported in March last year when the pandemic hit the United States.
Wall Street’s main indexes have hit record highs because of the latest round of coronavirus stimulus with the Biden Administration’s $US1.9 trillion relief bill that aims to jump start the US economy, while a largely better-than-expected earnings season also has bolstered investor confidence.
Cannabis companies including Tilray and Aphria reversed gains to drop 47 per cent and 32 per cent after Reddit investors started betting on the sector this week.
OPEC puts the dampener on oil demand
Major oil producers said demand for fuel would rebound more slowly than previously thought.
The Organization of the Petroleum Exporting Countries sees demand rising by 5.79 million barrels per day (bpd) this year to 96.05 million bpd.
In its monthly report, it lowered its growth forecast by 110,000 bpd from last month.
“While the global economy is showing signs of a healthy recovery in 2021, oil demand is currently lagging, but is forecast to pick up in the second half of 2021,” OPEC said.
The prospect of weaker demand has already prompted OPEC and its allies, known as OPEC+, to slow their plan to increase output.
At 7:30am AEDT, West Texas crude oil was down 1.3 per cent to $US57.94 a barrel, while Brent crude lost 1 per cent to $US60.86.
Spot gold lost ground as well, down 0.4 per cent to $US1,824.06.
At 7:30am AEDT, the Australian dollar rose 0.4 per cent to 77.54 US cents.
The Australian share market looks set for a flat start with the ASX SPI 200 unchanged at 6,779.