A trader walks past a digital stock price display outside the New York Stock Exchange in Manhattan in New York City, the US. Picture: REUTERS/MIKE SEGAR
A trader walks past a digital stock price display outside the New York Stock Exchange in Manhattan in New York City, the US. Picture: REUTERS/MIKE SEGAR

Sydney/Boston — Stock markets gained on Wednesday, as news of a working Covid-19 vaccine seemed to inoculate investors against worry about surging infections in Europe and the US, while the kiwi rose as traders thought the central bank sounded upbeat.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.4% and Japan’s Nikkei rose 1%, though most of the action was switching between sectors within markets, as investors shift from coronavirus winners into some of the hardest hit sectors.

Banks, for example, made modest additions to Tuesday gains, as did energy and some travel stocks while tech companies fell. Oil futures sat by two-month highs on the expectation  of better demand in a post-pandemic world.

Currency markets were mostly steady save for the kiwi, which climbed 0.5% to a 19-month high after the Reserve Bank of New Zealand kept rates on hold, as expected, but sounded less dovish than forecast about the outlook.

Other majors and fixed-income markets were mostly flat, with traders unwilling to extend a sell-off in the haven assets of bonds and the yen while a trying northern winter looms.

S&P 500 futures wobbled either side of flat and Nasdaq 100 futures rose 0.4% after another session of Wall Street selling of hitherto soaring big tech firms.

“A rotation theme remains evident in equity markets,” said National Australia Bank strategist Rodrigo Catril in a note.

“Big tech, which has benefited from our virus-driven change in behaviour, is now falling out of favour while small-cap stocks and those that have been most affected by social distancing restrictions have outperformed.”

Amazon was also under pressure overnight after European authorities filed an antitrust suit against the online retailing giant. It has suffered its sharpest two-day drop since March, shedding 8%, though has gained 64% so far in 2020.

In Hong Kong on Wednesday the Hang Seng traded just below flat as gains in financials were outweighed by losses in tech names such as Tencent and Alibaba.

In Tokyo, industrials led the charge as enthusiasm for buying airlines petered out.

In Australia banks made small gains while camping gear retailers, buy-now-pay-later darling Afterpay and Dominos Pizza extended losses.


Inoculate and rotate

The moves mirror a Wall Street rotation since Pfizer announced on Monday that its Covid-19 vaccine candidate, developed with German partner BioNTech, showed a 90% success rate in preventing infection during trials.

The blue-chip Dow Jones, buoyed by industrial shares, is up nearly 4% this week, while the tech-heavy Nasdaq has lost almost that much and the S&P 500 is up 1%.

That came with a big sell-off in US treasuries and the Japanese yen, even while Covid-19 deaths have crossed 300,000 in Europe and keep rising in spite of a second series of social restrictions as the northern autumn turns to winter.

“The rate of change that we’ve seen in the US bond market over the last few days is just not sustainable,” said Chris Weston, head of research at broker Pepperstone, who is looking for more easing from the US Federal Reserve in December.

“Given the shaky patch that we know we’ve got to navigate through, which is going to be a very dark winter in the US ... I just can’t see a situation where the Fed doesn’t do something to keep nominal bond yields in check.”

Investors are also looking to hear from European Central Bank president Christine Lagarde about the European economic outlook and stimulus prospects in a speech at 1pm GMT.

The US bond market is shut for Veterans Day but the yield on benchmark 10-year treasuries posted its highest close since March on Tuesday at 0.9720%.

Brent crude futures were last 30c firmer at $43.90 a barrel, just below a two-month high made overnight. Gold was steady at $1,879.36/oz.

Reuters

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