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SYDNEY: Asian stocks hit a record high on Monday (Nov 16) as vaccine optimism and strong economic data from China and Japan overshadowed concerns about rising coronavirus cases, lifting nearly all sectors.
MSCI’s broader Asia-Pacific stock index outside of Japan gained 1 percent to its highest level since its launch in 1987 with markets across the region hitting all-time highs.
Japan’s Nikkei traded at 29-year highs, South Korea’s Kospi at its highest since early 2018, and Australia’s ASX 200 hit an eight-month high in the morning, before a technical problem halted trading. Commerce.
S&P 500 futures rose 0.6 percent after the index’s record close on Friday, Nasdaq 100 futures rose 1 percent and European futures rose strongly with EuroSTOXX 50 futures 0.8 percent. and FTSE futures a half percent.
“There are mountains of cash on the sidelines, waiting to be put to work and since we have this news about vaccines, as well as less risk around the US elections, this is all flying into the stocks, “said Kyle Rodda. IG Markets analyst. “Everybody is thinking now that it is the signal to enter.”
Currency and commodity markets were a bit more circumspect, but the dollar was down somewhat against trade-exposed currencies and oil prices firmed up after falling on Friday.
Japanese economic growth, which broke records and forecasts to lift the world’s third-largest economy out of recession and better-than-expected industrial production in China added to the excitement, as did a weekend trade deal.
Though the details are few, 15 Asia-Pacific economies, including China and Japan, but excluding the United States, have agreed to cut future tariffs at a time of increasing protectionism elsewhere.
REASONS TO BE CAUTION
The flow-driven gains came despite many reasons for concern. The President of the United States, Donald, is seeking a prolonged transition to President-elect Joe Biden.
Axios reported that Trump plans a series of aggressive political moves against China in the next 10 weeks.
Coronavirus cases are increasing in Europe and the United States, and new outbreaks have emerged in South Korea, Japan, and Australia. The Brexit talks are again at a delicate crossroads.
A wave of defaults by state-owned companies in China has also spooked investors in mainland bonds.
Some of these fears kept currency market movements in check and left oil, an indicator of global growth, well below last week’s peaks as traders prepare for a gloomy winter ahead.
“The risk of even tighter restrictions looms to contain the spread of the virus,” said Vivek Dhar, a commodities analyst at the Commonwealth Bank of Australia. “Oil demand is particularly exposed to restrictions that limit mobility, as transport accounts for two-thirds of world oil consumption.”
On the Brexit front, the departure of hardline adviser Dominic Cummings from Downing Street is seen as a positive thing, perhaps allowing for more British concessions, but chief negotiator David Frost said on Twitter that the talks “may not be successful.”
The British pound slid higher against the dollar and the euro. The common currency was up 0.1 percent against the dollar at $ 1.1848.
The kiwi rose 0.5 percent to US $ 0.6883, while the Australian dollar lagged slightly ahead of a week of central bank speeches and important data, starting with the Governor of the Reserve Bank of Australia, Philip Lowe, at 0840 GMT.
A host of speakers from the US Federal Reserve also participated this week, beginning with Vice President Richard Clarida at 7pm GMT (3am Singapore time).
The bonds, which had sold hard on the vaccine news last week, were flat where they left off on Friday, with the yield on benchmark US 10-year debt at 0.8930 percent, below last week’s high above 0.97 percent.
Oil prices rose slowly, and Brent crude futures rose 0.7 percent to $ 43.08 a barrel, but below last week’s two-month high of $ 45.30. US crude rose 1 percent to $ 40.55 a barrel.
Gold rose 0.4 percent to $ 1,896 an ounce.
