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TOKYO / NEW YORK – Investors in Asian markets bought pandemic-affected stocks on Tuesday in hopes of a breakthrough against COVID-19 after drugmaker Pfizer indicated that its candidate vaccine had been shown to be more than 90% effective. in his most generalized essay.
Japan’s benchmark Nikkei Stock Average index at one point rose more than 400 points, or 1.7%, on Tuesday morning, hitting the 25,000 threshold for the first time in 29 years. The broader Topix also jumped more than 1% and reached its highest point in nine months.
The Nikkei lost strength in the afternoon and closed 0.2% higher. Tuesday marks the benchmark’s sixth consecutive day of earnings – it has risen more than 1,000 points since the end of last month.
Other Asian markets also rose, with Australia’s benchmark equity index and South Korea’s Kospi rising slightly while Hong Kong’s Hang Seng index rose 1%.
Investors took the opportunity to bet on stocks in companies that have been hit hard by the pandemic, such as airlines. Japan’s ANA Holdings closed 18% higher, while in Hong Kong, Cathay Pacific Airways and Singapore Airlines rose 13%.
Shares of other travel-related companies also rose, including West Japan Railway and East Japan Railway, which rose 15%.
Meanwhile, stocks of companies that have benefited from the pandemic, such as entertainment companies, plummeted. Nintendo shares fell more than 4%, while Sony’s share price fell more than 3%. Tencent Holdings saw its share price fall more than 4%.
The improved outlook for oil prices lifted CNOOC 13% and PetroChina 4.3%. Meanwhile, HSBC shares rose 5.7% in hopes that a vaccine will allow the bank to reduce bad debt provisions and increase interest income.
China’s CSI 300 Index of the largest stocks traded in Shanghai and Shenzhen fell 0.6% in afternoon trading. The index had risen for six consecutive sessions, benefiting from the recovery in the second-largest economy, which has managed to control the pandemic. Analysts said investors were turning a profit and deploying the cash in hit cyclical stocks across the region.
The generally bullish sentiment followed news from US-based Pfizer and its German partner BioNTech that their vaccine candidate “demonstrated evidence of efficacy against COVID-19 in participants with no prior evidence of SARS-CoV-2 infection. “.
Ray Attrill, strategist at National Australia Bank in Sydney, said: “My fellow market analysts at NAB and BNZ (Bank of New Zealand) have often commented that no one wants to go short on stocks the day a successful vaccine against the coronavirus. Well, we may just get caught up. “
Tai Hui, chief Asian markets strategist at JP Morgan Asset Management in Hong Kong, said: “The overnight market reaction strengthens our views on asset allocation over the next 6 to 12 months, as the Global economy is gradually recovering from the pandemic. A medical solution could potentially accelerate this rebound. “
“The vaccine and higher bond yields are important catalysts for a shift into pandemic laggards such as consumer discretionary, travel, energy and commodities and finance.”
The Dow Jones industrial average closed in the US on Monday with a gain of 834 points, or nearly 3%, at 29,157, having risen as much as 1,600 points at the start of trading.
While the benchmark index set a new intraday record and flirted with 30,000, the momentum waned as the session progressed. The broader S&P 500 Index closed with a modest 1% gain.
New York Stock Exchange: The Dow Jones Industrial Average opened at 30,000 on November 9. © Reuters
The announcement raised hopes of light at the end of the tunnel for the US economy as COVID-19 cases rise. Pfizer and BioNTech reported that the experimental vaccine was shown to be over 90% effective, a level that analysts at Citi Healthcare said “exceeds the most optimistic market expectations.”
Morgan Stanley said it expects “strong data from Moderna also in the short term” for the US biotech company’s trials of its own COVID-19 vaccine candidate.
But others cautioned against hoping that a vaccine will soon stop the coronavirus.
“Even based on the most optimistic estimates, the Pfizer vaccine will not launch fast enough for large parts of the population to avoid a second wave of winter 2020-21,” said Andrew Bishop, Global Head of Policy Research at Signum Global Advisors.
UK Prime Minister Boris Johnson, a COVID-19 survivor, echoed this warning.
“I don’t want to let people get away with the idea that this development today is necessarily a home run, a dunk, a shot to the back of the net yet,” Johnson told reporters, adding that “there is a long long , I’m afraid, until we have this better thing. “
Investors were also encouraged to take risks because Democratic candidate Joe Biden got enough electoral votes to win the US presidency, easing uncertainty about the outcome of last week’s election.
Biden urged Americans to take precautions.
“We could save tens of thousands of lives if everyone wore a mask over the next few months,” he said.
The Federal Reserve in its Financial Stability Report published Monday warned that markets could still take a hit if the economic impact of the coronavirus pandemic worsens in the coming months.
While most assets have remained high thanks to government support, signs of weakness are emerging in sectors such as commercial real estate, according to the report.
“Uncertainty remains high and investor risk sentiment could change rapidly if the economic recovery turns out less promising or progress in containing the virus disappoints,” the Fed said.
Additional information from Narayanan Somasundaram in Hong Kong
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