SYDNEY (Reuters) – Asian equities climbed to near-highs on Monday as concerns about rising COVID-19 cases and vaccine delays were dampened by optimism about a $ 1.9 billion fiscal stimulus plan to hurt the US economy let revive.
Sentiment in the region was also boosted by a report that China surpassed the United States as the largest recipient of foreign direct investment in 2020 with an inflow of $ 163 billion.
Futures markets also point to a firmer start elsewhere. E-mini futures for the S&P 500 increased by 0.37%, the futures for eurostoxx 50 as well as the London FTSE each increased by 0.3%, while those for the German DAX increased by 0.4%.
“The FDI story has certainly lifted China and its immediate neighbor today and blown an economic recovery with wind in geographic adjacent markets,” said Jeffery Halley, a market analyst at OANDA, in Singapore.
“Looking ahead, equities will find more meaningful responses from the progress of the Biden stimulus package, whether or not, and the degree of dullness shown by the Federal Reserve at its FOMC meeting this week.”
Global stock markets have scaled down a record high over the past few days on the bets COVID-19 vaccines will lower infection rates worldwide and with a stronger US economic recovery under President Joe Biden.
Yet investors are also wary of large-scale valuations amid questions about the effectiveness of vaccines to curb the pandemic, and as U.S. lawmakers continue to debate a coronavirus aid package.
MSCI’s broadest index of Asia-Pacific stocks outside Japan rose to 726.46, within a kissing distance of last week’s record high of 727.31.
The benchmark has risen by almost 9% so far in January, on track for its fourth monthly rise.
The Japanese Nikkei rose from the declines in early trading to 0.7%.
Australian equities added 0.4% after the country’s drug regulator approved the Pfizer / BioNTech COVID-19 vaccine with a phased deployment, likely by the end of next month.
Chinese stocks rose, with the blue-chip CSI300 index up 1.1%. Hong Kong’s Hang Seng Index jumped nearly 2%, led by technology stocks.
All eyes are on Washington DC, as U.S. lawmakers have agreed to get the COVID-19 vaccine for Americans, but it should be a priority, even if they include horns above the size of the U.S. pandemic relief package.
Financial markets are watching a massive package, though disagreements have meant months of indecision in a country suffering more than 175,000 COVID-19 cases a day, with millions unemployed.
Global COVID-19 cases killed about 100 million more than 2 million.
Hong Kong closed an area of the Kowloon Peninsula on Saturday, the first measure to hit the city since the pandemic began.
Reports of the new UK COVID variant were not only very contagious, but perhaps more deadly than the original tension also contributed to the concerns.
In the European Union, political leaders have expressed great dismay over the battle between AstraZeneca and Pfizer Inc. in delivering promised doses, with the Italian prime minister addressing the vaccine suppliers, saying delays are a serious breach of contractual obligations.
On Friday, the Dow fell 0.57%, the S&P 500 lost 0.30% and the Nasdaq added 0.09%. The three major U.S. indices closed higher for the week, with the Nasdaq up more than 4%.
Jefferies analysts said U.S. stock markets appear to be overvalued, although they remain strong.
“To really get the stock market down, rather than just making a bull market correction, there needs to be a catalyst,” said analyst Christopher Wood.
“This means an economic downturn or a significant tightening of Fed policy,” Wood said, noting that none of them would happen in a hurry.
In currencies, large pairs were trapped in a short range as markets waited for the Fed’s Wednesday meeting.
The dollar index declined to 90,073, with the euro at $ 1.2181, while the British dollar was slightly stronger at $ 1.3721 last time.
The Japanese yen was a weaker shade at 103.69 per dollar.
In commodities, Brent gave up early losses to be the last level at $ 55.41 a barrel and US crude rose 3 cents to $ 52.30.
Gold was flat at $ 1,852.9 per ounce.
Edited by Shri Navaratnam and Jacqueline Wong