Asian stocks keep rising on hopes over coronavirus treatment

Sydney — Asian shares advanced for a second consecutive session on Monday, underpinned by coronavirus hopes after the US Food & Drug Administration (FDA) authorised the use of blood plasma from recovered patients as a treatment option.

The announcement from the US FDA of a so-called “emergency use authorisation” came on the eve of the Republican National Convention, where Donald Trump will be nominated to lead his party for four more years.

E-Mini futures for the S&P 500 gained 0.3%.

MSCI’s broadest index of Asia-Pacific shares outside Japan jumped 0.65%, moving towards a six-month high touched last week.

Japan’s Nikkei reversed early losses to be last up 0.4%. Chinese shares rose too with the blue-chip CSI 300 index adding 0.8%.

South Korea’s Kospi, which has been on a slippery slope since hitting a more than two-year peak earlier this month, climbed 0.9%.

Sentiment was also supported by a Financial Times report that the Trump administration is considering bypassing normal US regulatory standards to fast-track an experimental coronavirus vaccine from the UK for use in the US before the presidential election.

“Markets are opening this morning to optimism on the therapeutics front after the FDA authorised the use of blood plasma from Covid-19 survivors to treat sick patients,” said Stephen Innes, chief global markets strategist at AxiCorp.

Record highs

“[It is] not the Covid-19 cure all the world is hoping for, but it is another positive step to help patient recovery time and get people back on their feet quicker.”

Analysts still urged caution with Wall Street indices already at record highs even as the world economy struggles to recover from the once-in-a-century pandemic.

“With risks rising somewhat and September a full month for policy, the end of summer is a good time to cross-check valuations and to consider both threats and opportunities,” said JPMorgan cross asset analyst John Normand.

Normand pointed to talks of a US fiscal package, the Fed’s policy review next month and the ramping up of the US election campaign as risk events over coming weeks.

Looming large over this week is a keenly anticipated address by Federal Reserve chair Jerome Powell at the Kansas City Fed Jackson Hole symposium, where he will talk on the Fed’s monetary policy framework review.

“This takes on even more significance after the market’s evident disappointment last week,” said Ray Attrill, head of forex strategy at Melbourne-based National Australia Bank.

The Fed’s July meeting minutes last week barely made a mention of its policy outlook while “failing to give succour to expectations” that its September meeting would reveal a formal commitment to new outcome-based forward guidance, Attrill added.

In currencies, the dollar was a shade weaker on the safe haven Japanese yen at 105.74.

The British pound nursed losses after falling 0.9% on Friday on lack of progress in post-Brexit trade talks with the EU. It was last at $1.3092.

Also on Friday came news that Britain’s public debt went above £2-trillion for the first time in July as the government ramped up public spending to cope with the coronavirus pandemic and tax revenues fell.

The euro was defensive at $1.1800 after falling 0.5% on Friday after disappointing manufacturing activity data.

That left the dollar index unchanged at 93.154.

In commodities, oil prices rose on Monday, with Brent crude up 14c at $44.49 a barrel and US crude climbing 11c to $42.45.

Gold experienced some selling pressure with spot prices off 0.4% at $1,931.54 an ounce

Reuters