Asia stocks extend global rally on Covid-19 vaccine hope; STI jumps 3%

SYDNEY (BLOOMBERG) – Asian stocks pushed higher on Tuesday (Nov 10) after a large-scale coronavirus vaccine study delivered the most-promising results in the battle against the worst pandemic in a century. Bonds and other haven assets steadied after overnight declines.

S&P 500 futures rose 0.2 per cent as of 9.06am in Tokyo. The S&P 500 rallied 1.2 per cent to close at a two-month high on news the coronavirus shot being developed by Pfizer and BioNTech prevented over 90 per cent of infections. The US benchmark had pared gains on concern that lawmakers will pass a smaller stimulus package. The Nasdaq 100 fell as investors rotated out of defensive technology names into shares depressed by the economic impact of lockdowns.

Japan’s Nikkei index jumped 1.6 per cent while Australia’s S&P/ASX 200 Index gained 1.5 per cent and Souht Korea’s Kospi index edged up 0.1 per cent.

Singapore stocks surged at the open with the Straits Times Index up 3 per cent at 9.02am local time.

Yields on 10-year Treasuries traded around their highest since March. A measure of credit-market risk eased to pre-pandemic levels, and US junk-bond yields fell to a record low. Oil pulled back after surging. Gold and the Japanese yen pared some of Monday’s losses. The dollar dipped. The Federal Reserve warned that asset prices in key markets could take a hit if the coronavirus pandemic’s economic impact worsens in coming months.

Investors pulled out of defensive assets and poured cash into markets that are closely tied to economic growth, with the value of the MSCI All Country Index jumping by as much as US$1.8 trillion after the latest vaccine developments. The top infectious disease expert in the US, Anthony Fauci, said the shot being developed by Pfizer will have a “major impact” on everything we do with regards to Covid-19 going forward.

News of the vaccine’s potential success came as the US surpassed 10 million Covid-19 cases on Monday and appeared poised to hit record hospitalizations later this week. President-elect Joe Biden warned the US faced a “dark winter” and announced a new coronavirus task force as his transition team seeks to fulfill a campaign promise to contain the outbreak.

“The clearing of the election fog has permitted underlying market fundamentals to come back into focus and the most recent vaccine news suggests a ‘return to normality’ should be coming sooner rather than later,” said Seema Shah, chief strategist at Principal Global Investors. “All the chips are starting to line up, and market sentiment may be in the early stages of a burst of positive energy.”

West Texas Intermediate crude fell 1.9 per cent to US$39.50 a barrel, paring a 7.3 per cent surge earlier.

Gold rose 0.6 per cent to US$1,873.97 an ounce. It dropped 4.5 per cent earlier.