Asian stocks lifted by vaccine hopes, but new cases cause concern

HONG KONG (AFP) - Hopes for a vaccine helped push equities higher yesterday following another tech-inspired record on Wall Street, with investors brushing off a surprisingly weak US jobs report, though optimism remains checked by the spreading virus and the US stimulus stalemate.

While vast central bank support has helped fan a surge in equities globally, titans such as Amazon and Apple have been major winners as the pandemic confines billions to their homes, pushing the Nasdaq to 
numerous records.

The advances came despite news that 1.1 million Americans made new claims for unemployment benefits last week, reinforcing concerns about the world’s biggest economy.

However, observers said the reading could give warring lawmakers in Washington the kick-start they need to agree a new rescue package, having failed to reach a consensus after two weeks.

But a tough week for regional markets looked set to end on a positive note, with optimism lifting after Pfizer and BioNTech SE said a vaccine they are working on could be up for regulatory review by October.

If all goes well, a treatment could be ready to roll out as soon as November.

While massive financial support from central banks and governments has been crucial to helping economies, a vaccine for a disease that has killed nearly 800,000 people and infected more than 22 million is seen
as paramount. 

The news “has raised some expectation... that life around the world could return to normal sooner than expected”, said AxiCorp’s Stephen Innes.

“This is not only good for market concerns, this is a world desperately anxious for a cure to put an end to the most severe global recession since the 1930s.

“From a stock market concern, it’s great for growth assets as planes will fly, the oil will flow, and laggard industries will emerge from the COVID-19 fog, and their stocks will soar. Indeed, with a vaccine cure, a trip to your local clinic could be the one-stop recession plugger before the year is out.”

Hong Kong, Seoul and Wellington rose more than one percent, while Taipei added two percent.

Tokyo edged up 0.2 percent and Shanghai put on 0.5 percent, while Singapore, Mumbai and Bangkok were also higher. Sydney dipped slightly. Paris and Frankfurt tracked the advance in the morning session but London reversed initial gains. However, the disease continues to spread, and is seeing a resurgence in Europe just as the rate of new US cases appears to be easing largely because of renewed travel, summer holidays and parties. Italy saw its highest daily tally since May, France reported 4,700 fresh infections - a massive increase on the previous day -- Spain’s daily jump beat even that of France, while Germany’s was at a four-month high. Despite this, the head of the World Health Organization’s European branch said new widespread lockdowns would not be needed.
“With the basic nationwide and additional targeted measures, we are in a much better position to stamp out these localised virus flare-ups,” Hans Kluge told reporters. 

“We can manage the virus and keep the economy running and an education system in operation.”

And Ken Berman at Gorilla Trades said, “The likelihood of another round of full lockdowns is decreasing, even in the case of a full-blown second wave of outbreaks, and that could continue to support risk assets in the coming months.

“Despite the improving outlook, risks remain high, and volatility could still rise in the usually more active last quarter of the year.”