Stocks gain, vaccine shields virus worries

Asia’s stock markets have opened higher, as vaccine optimism offsets worries about rising coronavirus cases in Europe and new lockdowns in the United States. Oil prices and risk-exposed currencies also edged higher.

Japan’s Nikkei opened 1 per cent higher at a 29-year peak. Australia’s ASX 200 rose 1 per cent to an eight-month high and MSCI’s broadest index of Asia-Pacific shares outside Japan stood at its highest since January 2018.

S&P 500 futures rose 0.7 per cent following the index’s record closing high on Friday and futures pointed to positive a positive start to the week in Hong Kong.

The US dollar, meanwhile, was marginally lower against the Antipodean currencies. Oil prices crept higher, though not enough to recoup late-week losses on worries about the winter ahead.

Traders are expecting more good vaccine news as soon as this week from drugmaker Moderna, following the successful trial of Pfizer’s similar drug – and that seems enough to assuage nearer-term concerns.

“There’s just mountains of cash sitting on the sidelines, waiting to be put to work and since we’ve got this vaccine news, as well as diminished risk around the US elections, all of this is flying into equities,” said Kyle Rodda at IG Markets.

“Everyone’s thinking now that it’s the cue to get in.”

President Donald Trump appeared on Sunday to acknowledge losing the US election but backtracked and said he concedes “nothing,” while president-elect Joe Biden focused on tackling the pandemic.

In North Asia, Japan’s quarterly economic growth beat expectations while China’s factory output and retail trade data is due later in the day.

Fifteen Asia-Pacific economies, including China and Japan but excluding the United States agreed to a trade deal over the weekend which, although light on detail or immediate tariff cuts, is a landmark pact for East Asian exporters.

In currency markets, majors were mostly flat apart from sterling, which made a nervous start to a week that looms large for Brexit trade talks, slipping a tad against the euro and the dollar to last hold at $1.3180.

The departure of hardline adviser Dominic Cummings from Downing Street last week may leave more room for British compromises but chief negotiator David Frost said talks “may not succeed”.

Negotiations have already missed several deadlines and the next one looms with Thursday’s European Union summit.

The euro brushed a one-week high of $1.1845 in early Asia trade and the yen sat at 104.66 per dollar.

The risk-sensitive Australian dollar bought $0.7284 and was steady ahead of a week of central bank speeches and significant data, beginning with Reserve Bank of Australia Governor Philip Lowe.

A slew of US Federal Reserve speakers are also up this week, beginning with Vice Chair Richard Clarida.

Bonds, which had sold off strongly on vaccine news last week, pared some losses into Friday’s New York close to leave the yield on benchmark US 10-year debt at 0.8930 per cent, from a week high above 0.97 per cent.

Oil prices inched higher, with Brent crude futures up 0.4 per cent to $42.94 a barrel but below last week’s two-month high of $45.30. US crude rose 0.6 per cent to $40.37 a barrel.

Gold held steady at $1,890 an ounce.

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