Asian markets rally again as recovery bets pile up

 (Photo by Kazuhiro NOGI / AFP)

HONG KONG – Asian markets bounded higher again Friday after Wall Street got back to record-breaking ways, with investors growing increasingly optimistic about the economic outlook as vaccines are rolled out and virus rates slow.

Expectations that Joe Biden will be able to push through his vast stimulus for the US economy were also boosting confidence and helping equities put last week’s rout firmly in the rear-view mirror.

Data showing US unemployment claims had fallen to their lowest level since November added to the positive energy, following a forecast-beating jobs creation reading Wednesday and ahead of a key non-farm payrolls report later in the day.

There is also relief on trading floors that the social media-fuelled buying frenzy that rattled markets last week had subsided.

While virus infections and deaths remain high, investors are hopeful that a slowdown in rates, combined with improved immunisation programmes — more people have now had a jab than have been sick — and the authorisation of more vaccines will soon allow governments to begin easing containment measures.

“While new variants continue to emerge, we are beginning to see real evidence of the vaccine impact on hospitalisation rates and fatalities,” said Lewis Grant at fund manager Federated Hermes.

“As long as the former does not interfere with the latter, the light at the end of the tunnel must edge closer.”

Focus is now on Washington, where US lawmakers are expected to push through a new rescue package for the world’s top economy.

And while Republicans have baulked at Biden’s $1.9 trillion plan — and proposing one worth less than a third of that — predictions are that the final bill will be more than one trillion dollars.

‘Colossal US stimulus’ 

The likelihood that the United States will soon be passing a huge spending package again has added to the feel-good factor among trades in recent weeks.

“The tides of US stimulus raising all boats is providing the significant risk-on accelerant,” said Axi strategist Stephen Innes.

“Optimism over the colossal US stimulus deal fuses at a critical point when US Covid crisis management regimen turns the corner on a positive note, providing market boosters with excess rocket fuel to burn.”

All three main indexes on Wall Street ended more than one percent higher, with the Nasdaq and S&P 500 hitting new records, and Asia extended the rally.

Tokyo, Hong Kong and Sydney all climbed more than one percent, while Shanghai, Taipei, Singapore and Seoul were also well into positive territory.

However, there remains some concern that markets could see some consolidation after a months-long rally, with some observers warning of a correction owing to frothy valuations.

In Hong Kong, Chinese short-video app company Kuaishou — a major rival to TikTok — nearly tripled on its market debut following a $5.4 billion initial public offering that was the biggest for an internet firm since Uber’s May 2019 listing.

Oil prices continued their march higher to 13-month highs thanks to bets on a surge in demand as people return to their normal lives. WTI is now up more than eight percent in the past week and Brent has climbed more than six percent.

Key figures around 0300 GMT

Tokyo – Nikkei 225: UP 1.4 percent at 28,730.97 (break)

Hong Kong – Hang Seng: UP 1.1 percent at 29,426.82

Shanghai – Composite: UP 0.9 percent at 3,532.92

Euro/dollar: DOWN at $1.1956 from $1.1962 at 2200 GMT

Dollar/yen: UP at 105.55 yen from 105.52 yen

Pound/dollar: UP at $1.3670 from $1.3666

Euro/pound: DOWN at 87.46 pence from 87.52 pence

West Texas Intermediate: UP 0.9 percent at $56.74 per barrel

Brent North Sea crude: UP 0.8 percent at $59.32 per barrel

New York – Dow: UP 1.1 percent at 31,055.86 (close)

London – FTSE 100: DOWN 0.1 percent at 6,503.72 (close)

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