Asian stock markets rally on vaccine hope, recovery signs
July 02 2020 09:36 PM
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Asia
Pedestrians walk past an electronic ticker board and a screen displaying stock figures outside the Exchange Square complex, which houses the Hong Kong Stock Exchange. The Hang Seng Index rose 2.9% to 25,145.96 points yesterday.

AFP/Hong Kong

Equities rose yesterday following a record lead from Wall Street, with investors cheered by hopes for a vaccine, more positive economic data and further lockdown easing in Europe.
The developments helped offset a worrying spike in infections in the United States, which has led to the reimposition of containment measures that could slow recovery in the world’s top economy, and warnings of worse to come.
Hong Kong led the gains on reopening after a one-day break, despite concerns about a new security law imposed on the city by China that observers said was more draconian than feared and could impact its future as an attractive business hub.
And while there are worries about the issue causing further friction between Beijing and the West, markets remain positive for now.
The Hang Seng Index rose 2.9% to 25,145.96, while Shanghai ended up 2.1% to 3,090.57.
Sydney, Mumbai, Seoul, Wellington and Bangkok were all up more than 1%, while Manila also chalked up more than 2% gains.
Taipei, Singapore and Jakarta were all in positive territory.
Tokyo ended up 0.1% to 22,145.96 points with signs of a flare-up in new cases in the Japanese capital weighing on sentiment.
The gains came after another all-time high for the tech-heavy Nasdaq on Wall Street, with investors now awaiting the release of key US June jobs data later in the day for a better grip on the economy following May’s surprise jump in employment.
There was some cheer as figures from payroll services firm ADP showed a 2.37mn increase in private jobs – slightly below forecasts – though it added that 3.06mn posts were created in May, a revision from its initial report of 2.76mn lost.
Adding to signs that the worst of the economic hit may have passed, US factory activity began growing again, while the rise in German retail sales was four times more than expected in May.
Meanwhile, hopes for a vaccine were given a boost after Germany’s BioNTech and US pharmaceutical giant Pfizer reported positive preliminary results from a joint project, which showed positive antibody responses. “Investors largely are shrugging off higher cases... as Pfizer reported positive results from a vaccine trial,” said Neil Wilson at Markets.com.
“We have been here before – it’s too early to get too excited – but a working vaccine is the holy grail as it would allow real normality to return to the economy.”
Europe continued with its lockdown easing, with the EU reopening its borders to visitors from 15 countries, while Spain and Portugal held a ceremony to free up their land border.
And the Netherlands confirmed the lifting of measures imposed on its brothels and red light districts.
“It’s been a risk-positive start to the new quarter, starting as the old one went out, with more positive data surprises out of the US and encouraging news regarding potential coronavirus vaccine development,” said National Australia Bank’s Ray Attrill.
But he warned of a “need to be on guard for the recent stalling or even reversal of social distancing restrictions in many US states prompting setbacks in some of these readings in coming months.” There are increasing worries over a second wave of infections elsewhere, led by the United States, which on Wednesday reported more than 50,000 new cases for the first time and several US states imposed 14-day quarantines on visitors ahead of the July 4 weekend celebrations.
California suspended indoor dining at restaurants in Los Angeles and several counties, while New York scrapped plans to allow restaurants to seat customers inside from next week.
Apple announced it would close another 30 US stores yesterday, half of them in California.
And the World Health Organization warned that with more than 10mn known infections worldwide and more than 500,000 deaths, the pandemic is “not even close to being over”.
“There’s this inherent tension between health of the economy and health of the population,” said David Lebovitz, a strategist at JPMorgan Asset Management.
“It’s going to be the way to think about what drives markets over the next couple of weeks or months.”



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