Vaccine news leads Asian stocks to rally but signs of weakness appear By Reuters

By Scott Murdoch

HONG KONG (Reuters) – Asian stock markets mostly rose on Tuesday as global investors applauded successful test data for a coronavirus vaccine, although expected delays in any mass deployment erased early gains.

European futures trades during the Asian session showed a lower open of at least 1.2%, while US futures showed a potential decline of at least 0.5% after the strong gains of Monday market.

The positive tone in Asian stocks came after Pfizer Inc (NYSE 🙂 said its COVID-19 vaccine, developed with its German partner BioNTech SE (NASDAQ :), was over 90% effective in preventing infections, marking the first successful results from a clinical trial at large scale.

Major Asian markets soared on vaccine news before weakening later in the session.

225 ended near 0.3% after rising 1.1% early in the session, hitting a 29-year high.

Australia’s S & P / ASX 200 closed 0.66% higher after trading as high as 1.6%, while Hong Kong’s was at 0.77% in the afternoon after rising by 1% at the start of trading.

Singapore’s Straits Times gained 2.94% to take the index to its highest level since June.

Despite the optimistic tone of the region, there was some weakness in China, with the CSI300 index slipping 0.17%.

Analysts attributed the decline to the high exposure of Chinese indices to technology stocks, which came under pressure as investors saw less reliance on technology consumers if a vaccine resulted in easing of movement restrictions.

The largest MSCI index of Asia-Pacific stocks outside of Japan was 0.1% higher.

“The market is eagerly awaiting a more sustainable solution to the pandemic and that is why we have seen such a strong reaction,” said Tai Hui, chief Asia market strategist at JPMorgan (NYSE 🙂 Asset Management

However, he 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 ”.

Equity optimism was not shared across all asset classes. Oil prices slipped in Asian trade after posting the largest single-day percentage gain in five months.

The overnight rise prompted some traders to take profits, analysts said.

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

STOCK ROTATION

Airlines, travel and tourism stocks across Asia benefited from positive sentiment from the vaccine announcement and held on to gains as the broader indices weakened in the afternoon.

“No surprise, but it’s basically a rotation … what was bought in the last eight months is now sold and what was sold is bought,” Citigroup (NYSE 🙂 director of global markets Elizabeth Tian said.

Qantas Airways closed up 8.3% to its highest level since March, Japan Airlines was up 20.6% and ANA Holdings was up 17.5%.

In Hong Kong, shares of Cathay Pacific Airways (OTC 🙂 jumped 13%, the best since July.

“Markets will get ahead of themselves in the short term with the 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.

On Wall Street, the index rose 2.95%, the S&P 500 gained 1.17% while the fell 1.53%. E-mini futures for the S&P 500 rose 0.47%.

While shares also rallied assuming 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 difficult transition from

The Australian dollar was down 0.08% against the greenback to $ 0.7279.

The yen strengthened 0.38% to 104.96 per dollar, while the pound last traded at $ 1.3182, up 0.14% on the day.

The vaccine news also skyrocketed long-term US Treasury yields in 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 sell off 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, a barometer of investor anxiety, hit its lowest closing level since late August.

Oil prices have lost momentum in Asian trade. Light fell 1.49% to $ 39.74 a barrel as it slipped 1.06%. [O/R]

added 1% to $ 1,880.26 an ounce.