Hopes for vaccine help push Asian equities higher
HONG KONG: Optimism for a Coronavirus Disease 2019 (Covid19) vaccine helped push Asian markets higher yesterday while traders were also cheered by a pledge from President-elect Joe Biden’s team that they were not planning an economically damaging nationwide lockdown despite surging cases in the US.
However, while there is growing expectation a treatment will be available in the new year, gains were tempered by worries about a spike in the disease in the US and across Europe.
After a painful October, equities have enjoyed a huge bounce this month after Biden’s election win, which was followed by news that Pfizer and BioNTech’s vaccine candidate had proved 90 per cent effective, lifting hopes the world can soon begin returning to normal.
“The vaccine enthusiasm booster shot remains the dominant narrative, even with surging infections across the US,” said Axi strategist Stephen Innes.
“Indeed, the vaccine could prove to be the ultimate market backstop and recessionary economic plugger.”
Tokyo led the gains, jumping more than two per cent, helped by news that the world’s number three economy had surged out of recession in the third quarter, expanding a forecast-beating five per cent thanks to a pick-up in domestic demand and exports.
Sydney rose 1.2 per cent before trading was suspended for the day owing to what the stock exchange said were data issues.
Shanghai and Seoul put on two per cent and Taipei more than that, while Singapore added more than one per cent. There were also healthy gains in Hong Kong, Jakarta, Bangkok and Wellington. The advances came after another strong performance on Wall Street last week, where the S&P 500 finished at a record high. All three main New York indexes were up in futures trading.
Traders also cheered the signing Sunday of the world’s biggest free-trade deal by 15 AsiaPacific countries – including Japan and China – that covers about a third of the planet’s GDP. The agreement was seen as an example of international cooperation following years of Trump pushing unilateralist policies.
“The fact that the agreement got over the line after eight years of negotiation between a widely disparate group of nations, is an achievement in itself,” said OANDA’s Jeffrey Halley.
“That has left the Asia-Pacific with a feeling that there is life in the world, with or without the US.”
The upbeat mood was helped by one of Biden’s advisers saying the incoming president would not impose a national lockdown to contain the virus, which has now infected more than 11 million Americans.
Instead, Vivek Murthy said officials would use targeted measures to limit the disease’s spread, preferring to protect people’s jobs and the already shaky economic recovery.
Chris Weston, at Pepperstone Group, said: “There is certainly elevated chatter that potential shutdowns in the US will weigh more in the near-term, and maybe so, but investor sentiment is the most elevated since 2017.”
Innes added that comments from the heads of the US, UK and European central banks “also sprinkled just enough forward guidance fairy dust to ensure investors are confident the market will be sufficiently flush to bridge the gap between now and hopefully when the vaccines arrive”.
“Indeed, this is very positive mood music to the market ears and allows investors to look through the current level of headline Covid uglies.”
However, China-US tensions were back on the radar after Axios reported that Trump was considering a range of new tough measures against Beijing in the last few weeks of his presidency.
The report said he could unveil sanctions or trade restrictions against more firms, government entities or officials, citing human rights violations or national security. The moves would be made in such a way as to make it tough for Biden to row them back.