Asia stocks edge higher after vaccine hopes push Wall Street to record highs

HONG KONG/NEW YORK (Reuters) – Asian stocks held gains and moved tentatively further into record territory on Tuesday, after U.S. benchmarks were pepped up by news of another promising coronavirus vaccine, though futures indicated the rally could stall in European hours.

FILE PHOTO: TV crews talk in front of a large screen showing stock prices at the Tokyo Stock Exchange in Tokyo, Japan October 2, 2020. REUTERS/Kim Kyung-Hoon

Investor sentiment was given a boost when Moderna Inc MRNA.O said its experimental COVID-19 vaccine was 94.5% effective in preventing infection based on interim late-stage data.

The Cambridge, Massachusetts-based firm became the second drugmaker, after Pfizer Inc PFE.N, to announce promising trial data in the development of a vaccine. Its shares gained 9.6% on the day.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS gained 0.17% on Tuesday, a day after hitting its highest level since launching in 1987.

The MSCI World Index of global shares .MIWD00000PUS which also hit a record high on Monday, ticked higher still in the Asian session.

“The market is assuming that we can see the end of the tunnel, that in 2022 a large part of the world’s population will start to receive access to vaccines,” said Herald van der Linde, HSBC’s head of equity strategy for Asia Pacific.

There were initial indications that this was sparking a change in investors’ attitudes, he added.

“The vaccine might mark a normalisation in markets whereby people start to rotate and move out of stocks and markets that have rallied, and move into ones that have not done as well,” van der Linde said, citing some markets in Southeast Asia.

Asia gains on Tuesday were led by benchmarks in Singapore .STI and Indonesia .JKSE which both rose around 1%, while Hong Kong .HSI rose 0.1% and Australia’s S&P/ASX 200 .AXJO was up 0.23%.

Japan’s Nikkei 225 .N225 rose 0.24% after hitting a 29-year high the day before, but Chinese blue chips .CSI300 dropped as recent bond defaults hit sentiment.

However, despite a steady if muted performance in Asian trading, futures predicted a turnaround later in the day.

S&P 500 futures .ESc1 dropped 0.44%, European EuroSTOXX 50 futures STXEc1 fell 0.55% and FTSE futures fell FFIC1 0.4% late in the Asia session.

The positive vaccine news helped oil prices hold onto Monday’s gains.

U.S. crude CLc1 on Tuesday firmed 0.56% to $41.57 per barrel after rising 3.02% on Monday, and Brent LCOc1 gained 0.7% after a 2.43% jump the day before.

In currency markets, China’s central bank on Tuesday lifted its official yuan midpoint to the highest in nearly 29 months, underpinned by solid gains in spot prices a day earlier on the back of strong economic data.

The vaccine news helped the risk-friendly Australian dollar AUD=D4, which climbed to a one-week high against its U.S. counterpart. Rising virus case numbers in the United States clouded views on the dollar, which dropped against a basket of major currencies =USD.

U.S. Treasury yields rose on Monday and into Tuesday and the yield curve steepened in the wake of the vaccine developments. The yield on Benchmark 10-year notes US10YT=RR was last at 0.9127%, from 0.893% late on Friday.

Graphic: Global assets – here

Graphic: Global currencies vs. dollar – here

Graphic: Emerging markets – here

Graphic: MSCI All Country Wolrd Index Market Cap – here

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