Asian shares rise as vaccine hopes inject relief

Asian shares rose on Monday, pushing a broad regional index to a record high as investors pinned their hopes for economic revival on coronavirus vaccines, even as the world contends with surging case numbers and delays to fresh US. stimulus.

European investors shared the brighter outlook in early trades, with pan-regional Euro Stoxx 50 futures gaining 0.29 per cent, German DAX futures 0.26 per cent higher and FTSE futures up 0.21 per cent.

Investors’ fresh optimism comes after a top official of the US government’s vaccine development effort said Sunday that the first vaccines could be given to US healthcare workers and others recommended by mid-December.

Despite the grim backdrop of accelerating COVID-19 infections in the United States, the forecast helped to raise hopes that lockdowns that have paralysed the global economy could be nearing an end. “With the vaccine on its way and the likelihood that economic damage being done by the virus will lift, we’ll still have in place substantial support from central banks and governments. And that is an economic sweet spot that should see a significant economic bounce,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney. “It’s fascinating that investors are willing to focus on that aspect. It does require some pretty heavy squinting, including looking through the rising infection rates that we’re seeing right now. But there is a real optimism around it.”

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Total US COVID-19 cases topped 12 million over the weekend and more than 255,000 people have died.

MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.71 per cent on Monday, pushing past a previous record high touched on Friday. Seoul’s Kospi was 1.83 per cent higher as an optimistic earnings outlook for South Korean chip giants drove gains.

Japanese markets were closed for a holiday, but Nikkei futures added 0.27 per cent to 25,815.

The regional index also got a boost from Australian shares which gained 0.34 per cent as the country eased some COVID-19 restrictions. Most of the country has seen no new community infections or deaths in several weeks.

Chinese blue-chips added 1.54 per cent. Analysts said the gains belied fragile sentiment as monetary and fiscal help for the US economy remained elusive. US Treasury Secretary Steven Mnuchin said on Thursday that key pandemic lending programs at the Federal Reserve would expire on Dec. 31, putting the outgoing Trump administration at odds with the central bank and potentially adding stress to the economy.

“Discussion is only beginning and may take some time if the recent partisan disagreements over the composition and magnitude of fiscal spending are any indication,” analysts at ANZ said in a note.

In currency markets, a rise in the safe-haven yen underscored nagging investor concerns. The dollar softened 0.12 per cent to 103.73 while the euro gained 0.18 per cent on the day to $1.1874. The dollar index, which tracks the greenback against a basket of six major rivals, nudged down to 92.250. Commodity markets were more bullish, with traders optimistic about a recovery in crude demand pushing oil higher.

Global benchmark Brent crude rose 0.58 per cent to $45.22 per barrel and US crude bumped 0.28 per cent higher to $42.54 per barrel. Spot gold added 0.19 per cent to $1,874.06 per ounce. – Reuters