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SYDNEY (Reuters) – Asian stocks rose on Monday as concerns over rising COVID-19 cases and delays in vaccine supply were overshadowed by expectations of a $ 1 fiscal stimulus package, $ 9 trillion to help jumpstart the US economy.
Global stock markets have hit record highs in recent days on bets that COVID vaccines will begin to reduce inflection rates around the world and on a stronger economic recovery in the United States under President Joe Biden.
Yet investors are also wary of high ratings amid questions about the effectiveness of vaccines in curbing the pandemic and as US lawmakers continue to debate a coronavirus aid package.
The largest MSCI index of Asia-Pacific stocks outside of Japan edged up to 721.96 and a short distance from last week’s high of 727.31.
The core index is up 8.5% so far in January, on track for its fourth consecutive monthly increase.
Japan’s Nikkei rebounded from falling early in the session to rise 0.36%.
Australian shares were also slightly higher after the country’s pharmaceutical regulator approved the Pfizer / BioNTech COVID-19 vaccine, with authorities saying a phased rollout will begin at the end of next month.
Chinese stocks rose, with the blue-chip CSI300 index rising 0.6%.
“The spotlight will be on Washington DC this week,” said Stephen Innes, chief global markets strategist at Axi.
The Biden administration tried to allay Republicans’ concerns that their $ 1.9 trillion pandemic relief proposal was too costly, with lawmakers on both sides saying they agreed the COVID-19 vaccine to Americans should be a priority.
Financial markets have envisioned a massive economic recovery in the United States, although disagreements have led to months of indecision in a country suffering from more than 175,000 cases of COVID-19 a day with millions of unemployed.
“Vaccine breakthroughs make it likely that life will become more functional again at some point in 2021, which will translate into higher GDP growth and more robust corporate profits,” said Innes.
“But the increase in global COVID19 infections, new variants of the virus, tighter social distancing restrictions, and delays in vaccine rollouts in some locations, all increase short-term growth risks.”
Global cases of COVID-19 are approaching 100 million with more than 2 million deaths.
Hong Kong locked down an area of the Kowloon Peninsula on Saturday, the first such measure the city has taken since the start of the pandemic.
Reports that the new UK COVID variant was not only highly infectious, but possibly more deadly than the original strain, also added to concerns.
In the European Union, political leaders have expressed widespread dismay at AstraZeneca and Pfizer Inc’s delay in delivering promised doses, with Italy’s prime minister attacking vaccine suppliers, saying the delays amounted to serious breach of contractual obligations.
On Friday, the Dow Jones fell 0.57%, the S&P 500 fell 0.30% and the Nasdaq fell 0.09%. The three major US indices closed higher for the week, with the Nasdaq up more than 4%.
Jefferies analysts said U.S. equity markets appeared overvalued while remaining bullish.
“For the stock market to have a truly unpleasant course, rather than just a bullish market correction, there has to be a catalyst,” said analyst Christopher Wood.
“This means either an economic slowdown or a material tightening of Fed policy,” Wood said, adding that neither was likely to happen in a hurry.
In currencies, major pairs were trapped in a narrow range as markets waited for a US Federal Reserve meeting on Wednesday.
The dollar index was flat at 90.19, with the euro at $ 1.2169, while the pound last traded at $ 1.3691.
The Japanese yen was unchanged at 103.77 per dollar.
In commodities, oil prices fell, with Brent falling 12 cents to $ 55.29 per barrel and US crude down 3 cents to $ 52.24.
Gold was higher with spot prices rising 0.2% to 1,855.9 an ounce.
Edited by Sam Holmes & Shri Navaratnam
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