Asia stocks fluctuate as virus cases offset vaccine roll-out hopes
HONG KONG – Asian markets swung Monday as hopes that vaccines will soon be rolled out played against concerns over a pick-up in virus cases around the world.
Oil prices were also under pressure ahead of a two-day meeting of major producers, with traders worried that they had still not agreed on an extension of the output cuts that have provided crucial support for most of the year.
World markets have surged this month thanks to breakthroughs on vaccines, while investors have also been cheered by Joe Biden’s US presidential election win and signs that incumbent Donald Trump will allow a smooth transfer, despite claiming voter fraud.
With at least three drugs in the pipeline and approval in some countries said to be just weeks away, there is a general feeling of optimism on trading floors as dealers forecast an economic rebound next year.
“Vaccines offer the promise that the major disruptions of the pandemic will fade from the scene in 2021,” said Axi strategist Stephen Innes. “Economic life will gradually heal; the world will start to move on from all the human suffering that the virus has wrought.”
Indications that a surge in new infections in Europe looks to be slowing were also providing some hope, while Britain and France are preparing to ease some of their lockdown restrictions.
However, Trump’s top infectious disease expert warned of a fresh jump in cases in the coming weeks after millions of Americans ignored scientific advice and travelled around the country last week for Thanksgiving.
“There almost certainly is going to be an uptick because of what has happened with the travel,” Fauci told CNN’s State of the Union.
“We may see a surge upon a surge” in two or three weeks, he said, adding that Christmas would probably bring more travel and family gatherings.
And White House coronavirus response coordinator Deborah Birx noted a surge in Covid-19 after a holiday weekend in May.
“Now we’re entering this post-Thanksgiving surge with three, four and 10 times as much disease across the country,’ she told CBS’s Face the Nation. “We are deeply worried.”
– Eyes on OPEC meeting –
Parts of Asia are also seeing new spikes, with Hong Kong leaders warning the city is entering a fourth wave, while containment measures have been introduced in South Korea and Japan.
Markets in Asia were mixed in early business.
Hong Kong, Sydney, Seoul, Singapore and Jakarta were all down but Shanghai rallied more than one percent, helped by data showing Chinese factory activity increased more than expected to a three-year high this month.
Tokyo, Wellington and Taipei were also up.
Oil traders are keenly awaiting the meeting of OPEC and other major producers that starts Monday, hoping they agree to continue their output cuts for another few months as the global economy stutters.
However, observers said there was a concern that there had so far been no sign they would do so.
“With no definitive pre-meeting guidance to the pilot markets, caution is warranted ahead of the meeting’s conclusion,” Innes said.
“The recent oil-price rally may have reduced OPEC’s sense of urgency. An extension still seems the most likely outcome, but risk/reward is skewed to the downside as oil is unlikely to move up meaningfully… if an extension is announced.”
The pound rose as Britain and the European Union try to hammer out a post-Brexit trade deal, with just weeks to go before the end of the transition period. There are concerns that failure to hammer out an agreement will deal a heavy blow to both economies.
However, while the two sides remain locked in dispute over two issues — fishing rights and fair trade rules — there is hope they will eventually get over the line as long as each makes concessions.
British foreign minister Dominic Raab told Sky’s Sophy Ridge On Sunday that this could be the final week of “substantive” talks, with time running out to agree and ratify a deal. “There’s a deal to be done,” he said.