Asian shares will hit document highs as US stimuli are inside attain
© Reuters. A man wearing a protective face mask walks past a stock market price in front of a broker in Tokyo amid coronavirus disease (COVID-19) outbreak
From Hideyuki Sano
TOKYO (Reuters) – Asian stocks hit record highs on Friday amid growing prospects for a major stimulus package in the US, and hopes that coronavirus vaccine adoption will boost the global economy supported investor sentiment.
MSCI’s broadest index for stocks in the Asia-Pacific region outside Japan rose 0.78%, beating its November 25 high, led by gains in the technology sector, while declining 0.22% on profit-taking.
European stocks are mixed. Single stock futures in the Eurozone traded 0.14% lower, while futures rose 0.49%.
In New York, earlier gains erased after the Wall Street Journal reported Pfizer (NYSE 🙂 cut the target for its COVID-19 vaccine launch due to supply chain obstacles.
The damage didn’t last long, however, as the S&P500 futures rose 0.23% early Friday.
A bipartisan coronavirus relief plan valued at $ 908 billion gained momentum Thursday at the U.S. Congress as conservative lawmakers voiced support.
“A deal before the end of the year seemed almost impossible some time ago, but now a package of around $ 1 trillion seems to be within reach,” said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ (NYSE 🙂 Morgan Stanley (NYSE 🙂 securities.
In addition to tax support, investors expect the US Federal Reserve to revise guidelines on its asset buying system later this month, while the European Central Bank is sure to increase its bond purchases next week.
Advances in COVID-19 vaccine development also led investors to bet that the recovery in corporate earnings will accelerate over the next year, outweighing concerns about the dire conditions of the pandemic right now.
“The stock markets are acting as if the world is already out of the disease. In reality, it will be some time before vaccines reach every corner of the world and infections decrease,” said Fujito of Mitsubishi UFJ.
“Given the soaring price gains last month there will be some profit-taking. Still, I don’t think the market is currently peaking.”
The United States exceeded 14 million known COVID-19 infections, with over 100,000 first-time hospitalized patients. California imposed a stay at home order to take effect if intensive care units near capacity in the coming days.
“Investors are now seeing the light at the end of the tunnel,” said Sean Taylor, chief investment officer for Asia-Pacific at Deutsche Bank’s Hong Kong wealth management division DWS. “Our preferred area for 2021 is stocks.”
The US dollar lost ground against other major currencies as well as riskier, less liquid currencies due to positive sentiment.
The euro rose to $ 1.2142, its highest level since April 2018, while the yen stood at $ 103.95 per dollar, holding on to the previous day’s 0.5% gains.
The British pound changed hands at $ 1.3442 after hitting a three-month high on Thursday, with traders holding on to hopes of a trade deal between the European Union and the UK.
While talks on a Brexit deal continued, an EU official said a deal was closer than ever, but a UK government source warned the chances of a breakthrough would diminish.
The MSCI Emerging Markets Index for Emerging Markets was at a 2 1/2 year high after rising more than 10% from the March low.
In commodities, oil prices received an additional spike after OPEC and Russia agreed to slightly relax their profound cuts in oil production by 500,000 barrels per day (bpd) starting in January, despite failing to compromise on broader, longer-term policies.
The increase means that the Organization of Petroleum Exporting Countries and Russia, a group known as OPEC +, would cut production by 7.2 million bpd, or 7% of global demand, as of January, compared to current cuts of 7.7 million . bpd.
rose to $ 49.92 a barrel, its highest price since early March, to last at $ 49.67, up 2%.