AP – Shares opened higher in Europe yesterday after gains in most Asian markets driven by hopes that a COVID-19 vaccine may hasten a return to normal for the global economy.
Benchmarks rose in Paris, London and Tokyo but slipped in Hong Kong and Shanghai. New Chinese regulations focussed on technology companies pulled shares in big technology companies like Alibaba and Tencent sharply lower.
Markets moderated after rallying earlier this week after Pfizer announced on Monday that a potential COVID-19 vaccine it is developing with German partner BioNTech may be 90 per cent effective, based on early but incomplete test results. But experts cautioned that many challenges remain, even if the shot is approved for use.
Meanwhile, investors are reassessing the high prices of Big Tech stocks that carried the stock market through the pandemic on expectations they’ll continue to thrive if the economy is in
Britain’s FTSE 100 rose 0.2 per cent to 6,310.92 and Germany’s DAX edged 0.1 per cent higher to 13,180.81. The CAC 40 in France also picked up 0.1 per cent, to 5,425.84. Wall Street futures also saw modest gains, with the contract for the S&P 500 up 0.3 and the contract for the Dow trading 0.5 per cent higher.
In Asia, Japan’s Nikkei 225 index gained 1.8 per cent to 25,349.60 and the S&P/ASX 200 jumped 1.7 per cent to 6,449.70. South Korea’s Kospi rose 1.4 per cent to 2,485.87. India’s Sensex climbed 0.3 per cent.
Hong Kong’s Hang Seng dropped back into negative territory, losing 0.3 per cent to 26,226.98 while the Shanghai Composite slipped 0.5 per cent to 3,342.20.
E-commerce giant Alibaba’s shares plunged 9.8 per cent in Hong Kong even as the company was in the midst of its annual Singles Day sales festival.
Tencent, owner of the popular WeChat social media platform, sank 7.4 per cent and online retailer JD.com tumbled 9.2 per cent.
Overnight, the rising hopes for a COVID-19 vaccine pushed investors to reorder which stocks they see winning and losing.
The S&P 500 dipped 0.1 per cent to 3,545.53. The Dow Jones Industrial Average gained 0.9 per cent to 29,420.92 and the Nasdaq composite dropped 1.4 per cent, to 11,553.86. The Russell 2000 index of small-cap stocks gained 1.9 per cent to 1,737.01, finally returning to where it was in January and just 0.2 per cent below its record high set in 2018.
Treasury yields and oil held onto their big gains from a day earlier or added some more amid strengthened confidence in the economy.
Clearing uncertainty about United States (US) leadership after Democrat Joe Biden clinched the last of the 270 electoral votes needed to become the next president has helped push the S&P 500 up 8.4 per cent this month, even as some Republicans including Senate Majority Leader Mitch McConnell rally behind US President Donald Trump’s efforts to fight the election results.
Many risks remain, the biggest perhaps whether investors have become too convinced about a potential COVID-19 vaccine just as coronavirus counts surge at worrying rates across the US and Europe, prompting some governments to restore restrictions on businesses.
“The biggest downside risk remains COVID-19 and how severe this wave is going to be,” Craig Erlam of Oanda said in a commentary. “COVID-19 is impossible to ignore, particularly with cases soaring once again and deaths on the rise.”
Republicans controlling the Senate on Tuesday unveiled a government-wide, USD1.4 trillion spending bill to support the pandemic-ravaged economy. The mostly bipartisan measure faces uncertain odds amid the post-election tumult in Washington.
With fresh help for the US economy from Congress still undecided, pressure is on central banks to step up support for markets. “In fact, the end of this year could provide the perfect cocktail of widespread monetary and fiscal easing, combined with one or more vaccines,” Erlam said.