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SYDNEY (Reuters) – Asian stocks hit near unprecedented highs on Monday as concerns over rising COVID-19 cases and delays in vaccine supply were overshadowed by optimism for a plan stimulus package of $ 1.9 trillion to help revive the US economy.
Sentiment in the region was also bolstered by a report that China overtook the United States to be the largest recipient of foreign direct investment in 2020 with $ 163 billion in inflows.
Futures markets have also signaled firmer starts elsewhere. Futures on E-mini for the S&P 500 rose 0.37%, futures on eurostoxx 50 as well as on the London FTSE rose 0.3% each while those on the German DAX rose 0.4%.
“The story of FDI has definitely uplifted China and its close neighbors today, injecting economic recovery into geographically adjacent markets,” said Jeffery Halley, OANDA market analyst in Singapore.
“Going forward, stocks will find more meaningful feedback on whether or not Biden’s stimulus package is progressing and the level of cohabitation displayed by the Federal Reserve at its FOMC meeting this week.
Global stock markets have hit record highs in recent days on bets that COVID-19 vaccines will begin to reduce infection 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 rose to 726.46, near last week’s high of 727.31.
The core index is up nearly 9% so far in January, on track for its fourth consecutive monthly increase.
Japan’s Nikkei rebounded from early trading falls to rise 0.7%.
Australian stocks rose 0.4% after the country’s pharmaceutical regulator approved the Pfizer / BioNTech COVID-19 vaccine with a phased rollout likely at the end of next month.
Chinese stocks rose, with the blue-chip CSI300 index rising 1.1%. Hong Kong’s Hang Seng Index jumped nearly 2%, led by tech stocks.
All eyes are on Washington DC as US lawmakers have agreed that getting the COVID-19 vaccine to Americans should be a priority, even as they lock in the size of the US pandemic relief program.
Financial markets have envisioned a massive package, 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 unemployed.
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 awaited Wednesday’s Fed meeting.
The dollar index eased to 90.073, the euro to $ 1.2181, while the pound was a little firmer at $ 1.3721.
The Japanese yen was a shade lower at 103.69 per dollar.
In commodities, Brent gave up early losses to be the last flat at $ 55.41 a barrel and US crude rose 3 cents to $ 52.30.
Gold was stable at $ 1,852.9 an ounce.
Edited by Shri Navaratnam and Jacqueline Wong
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