HONG KONG: Markets rose in Asia on Wednesday thanks to US stimulus talks, Brexit hopes and vaccine rollouts, but a surge in virus cases and lockdown measures continued to cause a tug-of-war between long-term optimism and near-term pain.
After months of stuttering talks between lawmakers in Washington, there appear to be signs of progress on a new rescue package for the world’s top economy as they discuss a bipartisan package.
High-level politicians from both sides remain locked in talks to resolve their differences before the end of the year, when millions of Americans could lose crucial support.
The lawmakers are working on a plan that strips out two contentious issues that had kept Democrats and Republicans from making a deal, while they are also looking to tie any new package in the passage of a so-called omnibus bill to keep the government funded.
“We’re still talking to each other, and I think there’s an agreement that we’re not going to leave here without the omni and a Covid package,” Senate Majority Leader Mitch McConnell said.
Hopes for a breakthrough helped fire a rally on Wall Street on Tuesday, with all three main indexes ending more than one percent higher.
That helped Asia to post healthy gains, helping pare losses following a weak start to the week.
Tokyo, Hong Kong, Seoul and Shanghai were all up, while Sydney, Taipei, Wellington and Jakarta each rose more than one percent. There were also gains in Singapore and Manila.
Hopes that the economy can get back on track next year were given an extra lift Tuesday when the European Medicines Agency said it had brought forward a meeting to decide on authorising the Pfizer-BioNTech vaccine by more than a week to December 21.
The drug is already being administered in Britain, the US and Canada.
That came as the US Food and Drug Administration recommended experts give the go-ahead to a second jab, produced by Moderna, later this week.
“Progress over an economic relief package in Washington, Brexit deal optimism that could settle by week’s end, and the likely seamless rollout of multiple highly effective vaccines have mixed to paint trading screens Christmassy green,” said Axi strategist Stephen Innes.
The rises came “despite the numerous headwinds both from the virus’s spread and the risk of increasingly tighter mobility restrictions”, he added.
The need for a big rollout of the vaccine has been laid bare by soaring infection and death rates around the world, which have led governments to impose strict containment measures leading into the Christmas holidays.
But Rodrigo Catril at National Australia bank noted: “Prospect of stricter lockdowns in Europe and US not enough to derail the positive vibes.”
Traders were also awaiting the conclusion later in the day of the Federal Reserve’s latest policy meeting, hoping for some guidance on its plans for monetary policy in the new year in light of the vaccine and rising virus numbers.
On currency markets, the pound dipped but maintained most of its recent gains as British and European negotiators press on with talks on a post-Brexit trade deal.
Investors were excited by a tweet from Nicholas Watt, a senior political editor at the BBC, that “the UK is heading towards a Brexit deal with the EU”, fuelling hopes of a breakthrough soon.
Catril added: “We have long expected a deal, and ignored the political posturing, and a positive outcome would see further strength” in sterling.
