Asian shares up as hopes for US fiscal stimulus plan outweigh rising Covid-19 cases

Sydney — Asian shares rose on Monday as concerns over rising Covid-19 cases and delays in vaccine supplies were eclipsed by expectations of a $1.9-trillion fiscal stimulus plan to help revive the US economy.

Global equity markets have scaled record highs in recent days on bets Covid vaccines will start to reduce the inflection rates worldwide and on a stronger US economic recovery under President Joe Biden.

Still, investors are also wary about towering valuations amid questions over the efficiency of the vaccines in curbing the pandemic and as US lawmakers continue to debate a coronavirus aid package.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose slightly to 721.96, a short distance from last week’s record high of 727.31.

The benchmark is up 8.5% so far in January, on track for its fourth consecutive monthly rise.

Japan’s Nikkei rebounded from falls in early trading to be up 0.36%.

Australian shares were slightly higher too after the country’s drug regulator approved the Pfizer/BioNTech Covid-19 vaccine, with authorities saying a phased rollout will begin late in February.

Chinese shares rose, with the blue-chip CSI300 index up 0.6%.

Too expensive

“The spotlight will be on Washington DC this week,” said Stephen Innes, chief global markets strategist at Axi.

The Biden administration tried to head off Republican concerns that their $1.9-trillion pandemic relief proposal was too expensive with lawmakers from both parties saying they had agreed that getting the Covid-19 vaccine to Americans should be a priority.

Financial markets have been eyeing a huge US economic stimulus though disagreements have caused months of indecision in a country suffering more than 175,000 Covid-19 cases a day with millions out of work.

“Vaccine breakthroughs make it likely that life will become more functional again at some point in 2021, resulting in higher GDP growth and more robust corporate earnings,” Innes said.

“But increasing global Covid-19 infections, new variants of the virus, tightening social distancing restrictions and delays in vaccine rollouts in some places all increase the near-term growth risks,” he said.

Global Covid-19 cases are inching towards 100-million with more than 2-million dead.

Hong Kong has lifted a lockdown imposed on an area of the Kowloon peninsula on Saturday.

Widespread dismay

Reports the new UK Covid variant was not only highly infectious but perhaps more deadly than the original strain also added to worries.

In the EU, political leaders expressed widespread dismay over a holdup by AstraZeneca and Pfizer in delivering promised doses, with Italy’s prime minister lashing out at the vaccine suppliers, saying delays amount to a serious breach of contractual obligations.

On Friday, the Dow fell 0.57%, the S&P 500 lost 0.30% and the Nasdaq added 0.09%. The three main US indexes closed higher for the week, with the Nasdaq up more than 4%.

Jefferies analysts said US stock markets look overvalued though they still remain bullish.

“For the stock market to have a real nasty unwind, rather than just a bull market correction, there needs to be a catalyst,” analyst Christopher Wood said.

“That means either an economic downturn or a material tightening in Fed policy,” Wood said, adding neither was likely to occur soon.

In currencies, major pairs were trapped in a tight range as markets awaited a US Federal Reserve meeting on Wednesday.

The dollar index was flat at 90.19, with the euro at $1.2169, while sterling was last trading at $1.3691.

The Japanese yen was unchanged at 103.77 per dollar.

In commodities, oil prices fell with Brent down 12c at $55.29 a barrel and US crude off 3c at $52.24.

Gold was higher with spot prices up 0.2% at 1,855.9 an ounce.

Reuters