Asian stocks hit record high as US stimulus is within reach

TOKYO (Reuters) – Asian stocks hit an all-time high on Friday on growing prospects for a major US economic stimulus package, while hopes that the coronavirus vaccine rollout will boost the global economy supported sentiment investors.

The largest MSCI index of Asia-Pacific stocks outside of Japan rose 0.78%, topping its Nov 25 high, led by gains in the tech sector, while Japan’s Nikkei fell 0.22% due to profit taking.

European equities have mixed views. Eurozone equity futures were down 0.14%, while UK FTSE futures were up 0.49%.

In New York, the S&P 500 erased previous gains after the Wall Street Journal reported that Pfizer lowered its COVID-19 vaccine deployment target due to supply chain obstacles.

Still, the damage didn’t last long, with S & P500 futures gaining 0.23% at the start of trading on Friday.

A $ 908 billion bipartisan coronavirus aid plan gained momentum in the U.S. Congress on Thursday as conservative lawmakers voiced support.

“A deal before the end of the year seemed almost impossible some time ago, but now a package of around $ 1 trillion seems within reach,” said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

In addition to budget support, investors expect the US Federal Reserve to change its forecast on its asset purchase program later this month, while the European Central Bank looks certain to increase its purchases bond next week.

Progress in the development of COVID-19 vaccines has also led investors to bet that the recovery in corporate profits will accelerate next year, which outweighs the current difficult conditions of the pandemic.

“The stock markets behave as if the world has already conquered disease. In fact, it will be a while before vaccines reach all corners of the world and infections start to decrease, ”said Fujito of Mitsubishi UFJ.

“Given the rapid pace of stock price gains over the past month, there will be some profit taking. Still, I don’t think the market is peaking yet. “

The United States has passed 14 million known COVID-19 infections with more than 100,000 first-time hospital patients. California has imposed stay-at-home orders that will come into effect when intensive care units near capacity in the coming days.

“Investors are now seeing the light at the end of the tunnel,” said Sean Taylor, chief investment officer for the Asia-Pacific region at Deutsche Bank’s asset management division, DWS in Hong Kong. “Our favorite area for 2021 is equities.”

This good mood saw the US dollar lose ground against other major currencies as well as riskier and less liquid currencies.

The euro rose to $ 1.2142, its highest level since April 2018, while the yen stood at $ 103.95 per dollar, retaining its 0.5% gains made the day before.

The British pound changed hands at $ 1.3442, after hitting a three-month high on Thursday as traders cling to hopes of a trade deal between the European Union and Britain.

As talks continue to secure a Brexit deal, an EU official said a deal was closer than ever, but a UK government source warned the chances of a breakthrough were diminishing.

The MSCI Emerging Markets Currency Index came in at 2 1/2 years, after gaining more than 10% from its March low.

In the commodities sector, oil prices rose further after OPEC and Russia agreed to slightly ease their sharp oil production cuts from January to 500,000 barrels per day (bpd), even though they had failed to find a compromise on a broader and longer term policy.

The increase means the Organization of the Petroleum Exporting Countries and Russia, a group known as OPEC +, would cut production to 7.2 million bpd, or 7% of demand. worldwide from January, against current cuts of 7.7 million bpd.

Brent hit $ 49.92 per barrel, its highest price since early March, and last stood at $ 49.67, up 2%.