HONG KONG (AFP) – Hopes for a vaccine to treat coronavirus and a further easing of lockdown measures around the world spurred a rally on Asian markets yesterday as investors tracked a surge across Europe and Wall Street.
A half-a-trillion-dollar Franco-German plan to support the European Union economy also lifted confidence, while Australian investors brushed off news that China had imposed massive tariffs on barley imported from the country.
While the number of infected people is fast approaching five million and more than 300,000 have died, the rates are slowing enough to allow governments to begin opening up their economies after months of economically devastating shutdowns.
Investors are eyeing a gradual return to some semblance of normal in key markets, with major tourist attractions in Italy and Greece reopening, top-tier football back in Germany and the “Big Three” Detroit automakers resuming manufacturing.
But the big news on Monday was United States (US) biotech firm Moderna reporting “positive interim” results in early testing of a vaccine candidate, with some analysts suggesting that if all goes well it could be in use by the end of the year.
All three main indexes on Wall Street surged between 2.4 and 3.9 per cent, with airlines and other tourism-linked firms – which have been battered by the lockdowns – soaring.
And Asia-based carriers were enjoying healthy buying yesterday. AirAsia jumped four per cent in Kuala Lumpur, Hong Kong’s Cathay Pacific was up more than two per cent and Qantas rose 3.6 per cent.
Regional stock markets were also well up.
Tokyo, Hong Kong, Sydney, Mumbai, Taipei, Singapore and Manila climbed more than one per cent, while Seoul and Bangkok put on more than two per cent. Wellington, Jakarta, Shanghai and Kuala Lumpur also advanced.
In early trade, London, Paris and Frankfurt all rose, having soared on Monday.
“The extraordinary policy support, both monetary and fiscal, is combining with greater optimism of an economic rebound,” said AxiCorp’s Stephen Innes.
“Compared to previous downturns that were more multi-faceted and ostensibly more difficult to unwind, the removal of a single recessionary input (the virus) via a vaccine or more effective treatment can pave the way for fast recovery in output.”
Traders were also taking heart from a proposal by France and Germany for a USD542 billion fund to finance the recovery of the European Union economy, with the cash going to “worst-hit sectors and regions” in the struggling bloc.
Fresh data yesterday showed the pain the disease is inflicting, with European auto sales collapsing a record 76.3 per cent on-year in April, having dropped 55 per cent the month before.
The plan sent the euro surging on Monday and it managed to hold on to most of the gains in Asia.
The upbeat mood also saw higher-yielding, riskier currencies rise against the dollar, with the Australian and New Zealand dollars both up more than one per cent, while the South Korean won was up 0.7 per cent.
And with people now being allowed out of their homes, oil prices continue to rise, with WTI up about 75 per cent this month and Brent around 40 per cent higher.
National Australia Bank analyst Tapas Strickland said, “The key question from here is can the rally in risk sentiment be sustained? It is possible with more reports of countries/US states easing containment restrictions.