Asian stocks rebound as investors applaud vaccine development

HONG KONG / BOSTON (Reuters) – Asian stock markets mostly rose on Tuesday, led by regional airlines, tourism and travel, as global investors applauded progress in developing a vaccine against the coronavirus which has boosted confidence in a global economic recovery.

Pfizer Inc PFE.N declared its COVID-19 vaccine, developed with its German partner BioNTech SE BNTX.O, has been shown to be over 90% effective in preventing infections, marking the first positive results of a large-scale clinical trial.

“Markets will remain on the lookout for more promising vaccine data in addition to news of a fiscal restart,” Mary Nicola, portfolio manager of PineBridge Investments, told Reuters.

The vaccine news sparked renewed optimism in stocks around the world, but oil prices slipped in Asian trading after registering the largest single-day percentage gain in five months.

However, some analysts have expressed doubts about how quickly the vaccine could be implemented.

“Since more testing is needed, so is the approval process. Manufacturing and distribution would mean that the vaccine, if truly effective, is still months away from mass deployment, ”said Tai Hui, chief Asian market strategist at JPMorgan Asset Management.

Brazil’s health regulator said on Monday it had suspended clinical trials of China’s Sinovac coronavirus vaccine after adverse effects emerged.

Nikkei 225 from Japan .N225 rose 1.1% after hitting a 29-year high in early trading and the Australian S & P / ASX 200 .AXJO increased by 1.6%.

Hong Kong Hang Seng Index Futures .HSI was up 1% in early trade, but there was marginal weakness in China as the CSI300 index .CSI300 slipped 0.24%. The largest MSCI index for Asia-Pacific stocks outside of Japan .MIAPJ0000PUS was 0.12% higher.

Shares of airlines, travel and tourism in Asia have benefited from optimism over the vaccine announcement.

Qantas Airways QAN.AX gained 8.6% to reach its highest level since March, Japan Airlines 9201.T pulled 17.6% more and ANA Holdings 9202.T increased by 16.4%.

In Hong Kong, Cathay Pacific Airways 0293.HK stocks jumped 14.9%, the best since July.

“Markets will get ahead of themselves in the short term with vaccine news, but in the longer term it looks like it’s going higher,” said John Milroy, adviser to Ord Minnett, Sydney .

Early Tuesday, Japanese Prime Minister Yoshihide Suga tasked his cabinet to devise a new stimulus package to help revive the country’s declining economy to offset the lingering effects of the coronavirus.

The better performance of the Asian markets followed the good performance overnight of the United States and Europe.

On Wall Street, the Dow Jones Industrial Average .DJI rose 2.95%, the S&P 500 .SPX gained 1.17% while the Nasdaq Composite .IXIC fell 1.53%. Future E-mini for the S&P 500 EScv1 rose 0.47%.

Pfizer’s announcement propelled European equities to an eight-month high, building on expectations of more stable trade policies after the US election.

While shares also rallied under the assumption that Democrat Joe Biden would be the next US president, the top Republican in the US Congress did not recognize Biden as president-elect on Monday, raising concerns about a sharp transition of power .

Senator Mitch McConnell said in a speech that President Donald Trump had every right to investigate the allegations of election “irregularities”, but presented no evidence of fraud.

The Australian dollar fell 0.18% against the greenback to $ 0.7272.

The yen strengthened 0.3% to 105.03 per dollar, while the British pound last traded at $ 1.3174, up 0.09% on the day.

The vaccine news also skyrocketed long-term US Treasury yields into their biggest one-day jump since March. The yield curve, a sign of risk appetite, hit its highest level since March.

Bonds saw their biggest selloff since falling from March highs. The yield on benchmark 10-year U.S. government debt, which rises when prices fall, jumped 10.3 basis points on Monday and held above 0.9% on Tuesday at 0.9099%

The CBOE market volatility index .VIX, a barometer of investor anxiety, hit its lowest closing level since late August.

Oil prices surged, posting their biggest daily percentage gain in more than five months, as vaccine news and an OPEC exit deal fueled optimism about a rebound in demand.

However, in Asian trade, some of the momentum has diminished.

Light crude oil fell 1.49% during the Asian session to $ 39.69 a barrel while Brent slipped 1.25%.

Spot gold added 0.32% to $ 1,867.6 an ounce.