Asian stocks are close to record highs on the back of US stimulus

Hong Kong’s Hang Seng jumped nearly 2% led by technology stocks. (AP photo)

Sydney: Asian stocks jumped to all-time highs on Monday as optimism overshadowed a $ 1.9 trillion fiscal stimulus package to help revive the US economy, concerns about soaring Covid-19 cases and delays in vaccine supplies.

Sentiment in the region was also boosted by a report that China has overtaken the United States to become the largest recipient of foreign direct investment in 2020, with inflows of $ 163 billion.

The futures markets have also indicated more stable starts elsewhere.

E-mini S&P 500 futures rose 0.37%, Eurostoxx 50 futures and London FTSE futures rose 0.3% each, while German DAX futures rose 0.4%.

“The FDI story has definitely lifted China and its immediate neighbors today, leading to an economic recovery in geographically adjacent markets,” said Geoffrey Haley, market analyst at Oanda in Singapore.

“Looking to the future, stocks will find a more meaningful response to the progress or lack of progress in Biden’s stimulus package, and the level of pessimism that the Federal Reserve demonstrated at the FOMC meeting this week.”

Global stock markets have hit record highs in recent days on bets that Covid-19 vaccines will begin to lower infection rates around the world and on a stronger US economic recovery under President Joe Biden.

However, investors also remain concerned about the high valuations amid questions about the efficacy of vaccines in curbing the epidemic, and as US lawmakers continue to debate the coronavirus aid package.

The MSCI Asia Pacific Index of broadest stocks outside Japan rose to 726.46, within walking distance from last week’s high of 727.31.

The benchmark rose nearly 9% so far in January, on its way to its fourth consecutive monthly rise.

Japan’s Nikkei recovered from the decline in early trade, rising 0.7%.

Australian shares rose 0.4% after the country’s drug regulator approved the Pfizer-BioNTech Covid-19 vaccine with a possible phased application late next month.

Chinese stocks rose, with the CSI300 leading index rising 1.1%.

Hong Kong’s Hang Seng jumped nearly 2% led by technology stocks.

All eyes are on Washington, DC as US lawmakers have agreed that getting a Covid-19 vaccine for Americans should be a priority even as they outgrow the size of the US relief package from the pandemic.

Financial markets have been looking for a huge package even though the disagreements mean months of indecision in a country with more than 175,000 Covid-19 cases a day with millions out of work.

Global Covid-19 cases progress to 100 million with more than 2 million deaths.

Hong Kong locked down a region of the Kowloon Peninsula on Saturday, the first such action the city has taken since the start of the epidemic.

Reports suggest that the new variant of Covid in the UK was not only highly contagious, but possibly more deadly than the original strain, adding to the concern.

In the European Union, political leaders have expressed widespread dissatisfaction with the delay of AstraZeneca and Pfizer Inc. to deliver the promised doses, with the Italian prime minister criticizing the vaccine suppliers, saying the delay amounts to a serious violation of contractual obligations.

On Friday, the Dow Jones was down 0.57%, the S&P lost 0.30%, and the Nasdaq rose 0.09%.

The three major US indices closed higher for the week, with the Nasdaq rising over 4%.

Jefferies analysts said US stock markets appear to be overvalued although they remain optimistic.

Analyst Christopher Wood said: “For the stock market to have a real bad break-up, and not just a bull market correction, there must be a catalyst.”

“That means either an economic setback or a fundamental tightening of Fed policy,” Wood said, adding that neither was likely to happen quickly.

In currencies, the major pairs have been stuck in a narrow range as markets await the Fed’s meeting on Wednesday.

The dollar index fell to 90.073, with the euro reaching $ 1.2181, while the British pound was finally more stable at $ 1.3721.

The Japanese yen was weaker at 103.69 per dollar.

In commodities, Brent gave up early losses to settle last time at $ 55.41 a barrel, and US crude rose 3 cents, to $ 52.30.

Gold was steady at $ 1,852.9 an ounce.

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