Asian stocks advance as vaccine, recovery hopes to triumph over soft US data



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© Reuters. A man wearing a mask walking to the Shanghai Stock Exchange building at the Pudong financial district in Shanghai

By Hideyuki Sano

TOKYO (Reuters) – Asian stocks rose on Thursday as euphoric markets in the face of COVID-19 vaccines and prospects for greater political predictability and economic stimulus under the new Biden administration topped a list of data weak US economies.

The largest MSCI index of Asia-Pacific stocks outside of Japan rose 0.3% as it gained 0.6%.

The US S&P 500 futures rose 0.2% in Asian trading on Thursday, while Nasdaq futures rose 0.4%.

MSCI’s largest global equity indicator spanning 49 markets added 0.1% to take its gains so far this month to 12.7%, on track to achieve its biggest monthly gain on record .

The rally began after Democrat Joe Biden’s election victory in the United States earlier this month raised hopes of increased government spending to support the pandemic-stricken economy and greater policy predictability after four years of presidency of Donald Trump.

“Reducing political uncertainty helps markets. It will make it easier for companies to make capital expenditures,” said Arihiro Nagata, general manager of global investments at Sumitomo Mitsui (NYSE 🙂 Bank.

“It is true that stock prices are quite expensive but the markets are finding less and less reason to sell them. In this environment, you cannot make a profit by selling. The only question to ask yourself is which ones? assets buy. “

On Wednesday on Wall Street, the shed lost 0.16% and the 0.58%, although heavy tech was up 0.47%.

Traders attributed the declines in the S&P 500 and the Dow Jones to weak US economic data.

U.S. Department of Labor Weekly Unemployment Claims figures suggest an explosion in new COVID-19 infections and trade restrictions are spurring layoffs and undermining the job market recovery.

“I think a lot of people got ahead by imagining the recovery taking shape. For me, the recovery will not materialize until we have a viable vaccine,” said Justin Lederer, Treasury analyst and trader at Cantor Fitzgerald.

But investors also noted that markets would remain awash with liquidity to invest as central banks around the world stand ready to provide more support to the pandemic-stricken economy.

The minutes of the last U.S. Federal Reserve policy meeting showed policymakers were considering giving markets a better idea of ​​how long they will continue to buy bonds to support an economy besieged by a resurgence in infections. coronavirus.

“It is a little irrelevant that they mention having taken this step ‘fairly quickly’ when they have not started a discussion about it with the public,” wrote Michael Feroli, chief US economist at JP Morgan in New York.

The Fed could extend the maturity of its Treasury purchases if its board members deem the deterioration of the pandemic warrants more adaptation measures, he added.

In commodities, oil prices rose for a fifth day, as a surprise drop in inventories added to the positive mood stemming from hopes for a recovery in demand. [O/R]

U.S. crude rose 0.77% to $ 46.06 a barrel and 0.88% to $ 49.04

In the currency market, the US dollar remained under pressure as riskier currencies benefited from increased optimism.

The dollar index against a basket of major currencies fell 0.07% to 91.919, hitting its lowest levels in nearly three months.

The euro remained firm at $ 1.1925 while the pound sterling also held near its three-month high of $ 1.3391.

The yen was little moved to 104.28 yen to the dollar.

Trade was slow as US financial markets will be closed Thursday for the Thanksgiving holiday. US bonds and equities will trade on a partial schedule on Friday.



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