Asian stocks were buoyant on Wednesday and the dollar eased as hopes of effective coronavirus vaccines and the growing prospect of more US fiscal stimulus cheered investors ahead of the Christmas holiday season.
In a sign the positive momentum was set to extend, Eurostoxx 50 futures and Germany’s Dax futures edged 0.1 per cent higher, while futures for London’s FTSE firmed 0.3 per cent.
MSCI’s broadest index of Asia Pacific shares outside of Japan rose 0.8 per cent after two straight days of losses.
The index, hovering near record highs, is up 3.8 per cent so far in December and is on track for its best yearly performance since 2017 thanks to generous government and central bank stimulus around the world.
Australian shares rose 0.8 per cent while South Korea’s KOSPI was up 0.4 per cent and Japan’s Nikkei added 0.2 per cent.
China’s blue-chip CSI 300 index added 0.15 per cent and Hong Kong’s Hang Seng index climbed 0.86 per cent.
“We expect many emerging market economies to continue to show positive momentum in 2021 led by Asia,’’ TD Securities wrote in a note, adding that, on aggregate, they would recover lost output from 2020.
“China is likely to see a more rapid convergence to pre-COVID GDP levels.’’
E-mini futures for the S&P 500 were off 0.05 per cent.
Overnight, US and European stocks, gold and oil were upbeat.
The Dow rose 1.1 per cent while the S&P 500 and the Nasdaq climbed 1.3 per cent each.
Optimism over a $1.4 trillion US spending package increased after House of Representatives Speaker, Nancy Pelosi, invited other top congressional leaders to meet late on Tuesday to hammer out a deal to be enacted this week.
Progress on the roll-out of vaccines continued after Moderna Inc’s COVID-19 vaccine appeared set for regulatory authorisation this week.
The US also expanded its rollout of the newly approved vaccine developed by Pfizer Inc. and BioNTech SE.
“Despite COVID-19 still raging in Europe and the United States, markets are looking through the near-term risks to economic growth and focusing on the likely better times in 2021,’’ Betashares chief economist, David Bassanese, wrote in a note.
“Central banks are promising to keep rates low for one to two years, which is supporting the economy and financial markets and also provides a ramp for equity price,’’ he added.
Markets will now look to the US Federal Reserve for new projections on whether the economy will suffer a double-dip recession or is on the cusp of a vaccine-inspired boom.
The central bank is to release a statement later in the day, with analysts expecting some guidance on when and how the Fed might change its bond purchases.
Optimism for a trade deal on Brexit also boosted stocks, while contributing to a weaker dollar against the British pound and the euro.
The dollar made a fresh one and half-month low of 103.40 against the Japanese yen as progress toward a spending bill and COVID-19 relief measures sapped demand for safe assets.
It is down 4.7 per cent this year so far.
Against the euro, the greenback languished near two and half-year lows and was last at $1.2160 after two straight days of losses while it was flat at $1.3459 on sterling.
In commodities, gold prices rose 0.1 per cent to $1,855.17 an ounce.
Gold, regarded as a hedge against inflation and currency debasement, has risen over 22 per cent so far this year amid unprecedented government stimulus globally.
Brent crude slipped eight cents to $50.68 a barrel and US crude fell six cents each to $47.56.