US stimulus, vaccine progress encourage equity bulls

Reuters TOKYO/NEW YORK Feb 3 | Updated on February 03, 2021

Asian shares and US stock futures rose on Wednesday as governments around the world looked poised to boost spending to help economies recover from the coronavirus and vaccine roll-out programmes accelerated.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.51 per cent. Australian stocks jumped by1.12 per cent. Shares in China fell 0.06 per cent. Japan's Nikkei added 0.66 per cent. Shares in Seoul rose by 0.44 per cent.

E-mini futures for the S&P 500 rose 0.36 per cent.

Wall Street rallied on Tuesday on renewed hopes for US President Joe Biden' proposed $1.9 trillion Covid-19 aid bill as the Senate took steps to allow Democrats to pass Biden's package without Republican support.

The US Treasury yield curve continued to steepen in Asian trading, reflecting expectations for more fiscal spending and growing economic optimism.

The roll-out of vaccines in many countries is gathering pace, earnings season in the United States and Japan has so far been favourable, and oil prices are at their highest in a year, which are all positive signs for the global economy.

"All the ingredients for a rapid recovery from Q2 onwards are getting sweetly baked into the reopening party cake," said Stephen Innes, chief global markets strategist at AxiCorp Financial Services.

The Dow Jones Industrial Average rose 1.57 per cent on Tuesday, the S&P 500 gained 1.39 per cent, and the NasdaqComposite added 1.56 per cent.

MSCI's gauge of stocks across the globe gained 0.18 per cent.

Russian authorities said they would be able to vaccinate about 700 million people this year with the Sputnik V coronavirus vaccine. Nations including India and Mexico are in talks to ink emergency deals to start administering the vaccine.

In the United States, Biden administration said it would increase the weekly supply of shots nationwide and start shipping coronavirus vaccines directly to retail pharmacies in addition to ongoing deliveries to states.

Sentiment was also bolstered by higher-than-expected earnings from tech giants Alphabet Inc and Inc, which overshadowed the retail trading frenzy that roiled markets last week.

The difference between the yield in two-year and 10-year Treasuries, the most-closely watched part of the yield curve, widened to 99.5 basis points on Wednesday.

The dollar traded near a two-month high against the euro as investors bet that the US economy will recover from the coronavirus shock faster than the euro zone.

The party for the Reddit-inspired trading frenzy that pushed GameStop's stock up five-fold in five days last week appeared over as its shares plunged 60 per cent in heavy trade to close at $90.00, less than one-fifth of an all-time peak on Friday.

"Wall street bets is hitting the point of diminishing value,"Innes said. "Retail traders will still be a force to be reckoned with, but we are perhaps past the peak YOLO world with the cat out of the bag."

Currency and commodities

Spot silver rose 1.4 per cent to $26.98 an ounce. That was a minor rebound from an 8 per cent tumble on Tuesday, and analysts say the retail trader-driven rally to a near eight-year peak in the previous session has faded.

Spot gold rose 0.1 per cent to $1,839.16 per ounce. US gold futures added 0.4 per cent to $1,840.90.

Oil prices continued their upswing as producers limited supply in the face of increased fuel demand from a bad winter storm in the US Northeast.

US crude futures climbed 0.2 per cent to $54.87 a barrel, just shy of a one-year high of $55.26 hit on Tuesday.

Brent crude futures rose 0.3 per cent to $57.62 a barrel, close to their highest in more than 11 months.

Published on February 03, 2021

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