Asian stocks rise as vaccine hopes lift risk appetite
Tokyo/New York — Asian shares advanced on Tuesday as prospects of a deal by EU leaders to jointly fund recovery of their economies and hopes for a coronavirus vaccine lifted risk appetite.
Japan’s Nikkei rose 0.6%, while MSCI’s broadest index of Asia-Pacific shares outside Japan gained 1.5% to edge near its four-month peak hit earlier this month.
On Wall Street, tech shares jumped after several days in the doldrums, pushing the Nasdaq Composite up 2.51% to a record closing high on Monday. The S&P 500 also hit a five-month peak.
Euro Stoxx 50 futures gained 0.25% in Asian trade to stand near their highest since early March.
EU leaders appeared close to agreement on a huge stimulus plan for their coronavirus-blighted economies, with EU Council president Charles Michel voicing confidence of reaching a deal on the €750bn recovery fund.
“They are now discussing a compromise on how the fund will be distributed between grants and loans. The question is no longer whether we will have a fund or not,” said Nobuhiko Kuramochi, market strategist at Mizuho Securities.
“The US is likely to adopt stimulus by the first week of August. We don’t know its exact size but I bet it will be something like $1-trillion to $1.5-trillion.”
Advisers to President Donald Trump and congressional Democrats will discuss the next steps in responding to the coronavirus crisis on Tuesday.
Though coronavirus infections have surged in recent weeks in the US’s south and west, investors hope another economic package, which will come after $3-trillion in stimulus earlier this year, will help the economy tide over a difficult period.
Hopes that vaccines against the Covid-19 disease might be ready by the end of year also supported risk assets, after promising early data from trials of three potential vaccines.
The positive mood, however, faces more reality checks later this month as earnings season will be in full swing in many countries in coming weeks.
“If companies give stronger guidance than market expectations, that will be positive for stocks. But is that really possible under the current uncertain environment?” said Tatsushi Maeno, senior strategist at Okasan Asset Management. “I think we need to be cautious about stock markets in the near term.”
In the currency market, the Chinese yuan inched up to hit its firmest since early March, helped by signs of recovery in the Chinese economy. The onshore yuan rose to as high as 6.9804 per dollar.
The euro stood near Monday’s four-month high of $1.14675 as traders looked to the outcome of the marathon EU summit that started on Friday. It last traded at $1.1459.
The yen was little moved at 107.19 to the dollar.
Gold held firm at $1,818 an ounce, having hit a nine-year high of $1,820.4 on Monday.
The metal retains its strength as an ultimate store of value as central banks around the world have committed themselves to an unprecedented level of money-printing to shore up pandemic-hit economies.
Brent crude ticked up 0.1% to $43.35 a barrel, while US West Texas Intermediate (WTI) was flat at $40.94.
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