Asia Stocks to Gain as S&P 500 Hits Another Record: Markets Wrap

(Bloomberg) -- Asian equities looked poised for modest gains after a fresh record in their U.S. counterparts, as stimulus hopes tempered concern about a surge in coronavirus cases. The dollar was steady.

Futures rose in Japan, Hong Kong and Australia rose. S&P 500 contracts ticked higher after the benchmark closed at an all-time high. Senate Majority Leader Mitch McConnell suggested setting aside some issues that have been roadblocks to a relief package -- a strategic retreat aimed at striking a deal. The Nasdaq 100 advanced for a 10th straight day, the longest rally in about a year. Pfizer Inc. jumped as U.S. regulators gave early indications they may grant emergency-use authorization to its vaccine. Benchmark Treasury yields dipped back below 0.92%.

Elsewhere, the pound pared declines after the U.K. dropped controversial parts of an internal bill that would have given it the power to unilaterally override the Brexit divorce treaty. Oil fluctuated.

With time running short the year-end break approaches, just as U.S. Covid-19 cases surpass 15 million, investors remain hopeful a stimulus deal can be struck. Democrats have opposed McConnell’s insistence on giving employers a shield from lawsuits, while he has been among Republicans blasting Democratic demands for assistance to state and local authorities as a bailout.

Meanwhile, a key sentiment indicator for U.S. stocks has reached its most bullish level in two decades. The weekly Cboe ratio of volume traded in puts versus calls fell to the lowest since July 2000 last week. This implies extreme positioning to the upside, as investors look beyond short-term uncertainty toward a continuing global recovery in 2021.

The opportunities are “in equities and credit, so we are overweight, we are risk on,” Richard Lacaille, global chief investment officer at State Street Global Advisors, said on Bloomberg TV. “We know that we will be tested again next year in terms of Covid and elsewhere.”

Here are some key events coming up:

• Thursday brings the European Central Bank policy decision and a press briefing from Christine Lagarde. Economists widely expect the central bank to increase and extend its pandemic bond-buying program.
• The U.S. Food and Drug Administration meets to discuss the vaccine made by Pfizer/BioNTech on Thursday. If the FDA authorizes emergency use, Health & Human Services Secretary Alex Azar said vaccine distribution could begin within 24 hours.

Here are the main moves in markets:

Stocks

• S&P 500 futures increased 0.2% as of 8:02 a.m. in Tokyo. The index gained 0.3% on Tuesday.
• Futures on Japan’s Nikkei 225 climbed 0.2%.
• Hang Seng Index futures rose 0.4%.
• Futures on Australia’s S&P/ASX 200 Index gained 0.5%.

Currencies

• The Bloomberg Dollar Spot Index was little changed.
• The euro bought $1.2107.
• The yen was at 104.17 per dollar.
• The offshore yuan held at 6.5187 per dollar.

Bonds

• The yield on 10-year Treasuries fell less than one basis point to 0.92%.
• Australia’s 10-year yield dipped one basis point to 1.01%.

Commodities

• West Texas Intermediate crude fell 0.1% to $45.54 a barrel.
• Gold held at $1,869.59 an ounce.

©2020 Bloomberg L.P.