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Stock Rally to Extend in Asia on Vaccine Hope: Markets Wrap

Andreea Papuc
·3 min read
Stock Rally to Extend in Asia on Vaccine Hope: Markets Wrap
Stock Rally to Extend in Asia on Vaccine Hope: Markets Wrap

(Bloomberg) -- Asian stocks looked poised for gains Tuesday after a large-scale coronavirus vaccine study delivered the most-promising results in the battle against the worst pandemic in a century. Bonds and other haven assets tumbled.

Futures indicated gains of at least 1% in Japan and Hong Kong. Australian shares opened higher. U.S. stock futures edged up. The S&P 500 closed at a two-month high amid strong volume on news the coronavirus shot being developed by Pfizer Inc. and BioNTech SE prevented over 90% of infections. The Nasdaq 100 fell as investors rotated out of defensive technology names into shares depressed by the economic impact of lockdowns. However, the broader U.S. stock gauge pared gains on concern that lawmakers will pass a smaller stimulus package.

Elsewhere, yields on 10-year Treasuries soared to the highest since March. A measure of credit-market risk eased to pre-pandemic levels, and U.S. junk-bond yields fell to a record low of 4.56%. Oil surged, while gold, the Japanese yen and the Swiss franc slumped. The dollar rose. Still, the Federal Reserve warned that asset prices in key markets could take a hit if the coronavirus pandemic’s economic impact worsens in coming months.

Investors pulled out of defensive assets and poured cash into markets that are closely tied to economic growth, with the value of the MSCI All Country Index jumping by as much as $1.8 trillion after the latest vaccine developments. The top infectious disease expert in the U.S., Anthony Fauci, said the shot being developed by Pfizer will have a “major impact” on everything we do with regards to Covid-19 going forward.

News of the vaccine’s potential success came as the U.S. surpassed 10 million Covid-19 cases on Monday and appeared poised to hit record hospitalizations later this week. President-elect Joe Biden warned the U.S. faced a “dark winter” and announced a new coronavirus task force as his transition team seeks to fulfill a campaign promise to contain the outbreak.

“The clearing of the election fog has permitted underlying market fundamentals to come back into focus and the most recent vaccine news suggests a ‘return to normality’ should be coming sooner rather than later,” said Seema Shah, chief strategist at Principal Global Investors. “All the chips are starting to line up, and market sentiment may be in the early stages of a burst of positive energy.”

These are some key events coming up:

Alibaba holds its annual Singles’ Day on Wednesday, an online global shopping phenomenon that had $38 billion of sales last yearEuropean Central Bank President Christine Lagarde, Bank of England Governor Andrew Bailey and Federal Reserve Chair Jerome Powellare among the speakers Thursday at an online ECB Forum entitled “Central Banks in a Shifting World”Finance ministers and central bankers from the Group of 20 hold an extraordinary meeting Friday to discuss bolder action to help poor nations struggling to repay their debts.

These are some of the main moves in markets:

Stocks

S&P 500 futures rose 0.3% as of 8:06 a.m. in Tokyo. The S&P 500 rose 1.2%.The Stoxx Europe 600 Index surged 4%.Nikkei 225 futures climbed 2.4% in Singapore.S&P/ASX 200 Index gained 1.1%.Hang Seng Index futures rose 1.9% earlier.

Currencies

The yen was at 105.31 per dollar after dropping 1.9%.The offshore yuan was at 6.6184 per dollar.The Bloomberg Dollar Spot Index gained 0.4%.The euro traded at $1.1817 after dropping 0.5%.

Bonds

The yield on 10-year Treasuries climbed 10 basis points to 0.92%.Australia’s 10-year bond yield jumped 11 basis points to 0.88%.

Commodities

West Texas Intermediate crude fell 1.1% to $39.84 a barrel, paring a 7.3% surge earlier.Gold was at $1,863.73 an ounce. It dropped 4.5%.

For more articles like this, please visit us at bloomberg.com

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©2020 Bloomberg L.P.

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