TOKYO / NEW YORK (Reuters) – Asian stocks soared on Wednesday, following modest Wall Street gains, as expectations that a vaccine will eventually win the battle against coronavirus fueled hopes for recovery, while tight expectations supply prices pushed oil prices to a one-year peak.
The broader MSCI index for Asia Pacific stocks outside Japan rose 0.61%, while Japan’s Nikkei 225 rose 1.12%.
Chinese shares were up 0.07%, while South Korea’s KOSPI was up 1.05%. Australia’s S & P / ASX 200 reversed losses and added 0.18%.
US stock futures were up 0.18%.
Treasury bills have broadened their recovery, further removing 10-year benchmark yields from the highest in almost a year and causing the yield curve to flatten slightly.
Euro Stoxx 50 futures fell 0.03%, German DAX futures rose 0.03% and Britain’s FTSE futures rose 0.18%, pointing to a moderate start to European trading.
Investors are betting that the next Biden government will increase the distribution of coronavirus vaccines in the United States and spend much on more stimuli, which will contribute to a global economic recovery and increased demand for commodities, analysts say.
Hugh Young, head of the Asia-Pacific region at Aberdeen Standard Investments, said he expected investor interest in Asia seen in the second half of 2020 to be sustained this year.
“The eternal issue is overvaluation. Asian markets have done extremely well, which is kind of frustrating, but certainly the quality is there in Asia, the moment is in Asia, so it looks like a stable and positive year for Asia, ”said Young on a panel at the Conference Reuters Next.
On Wall Street, stocks fluctuated almost unchanged during the session, not far from high records. The Dow Jones rose 0.19%, the S&P 500 rose 0.04% and the Nasdaq Composite rose 0.28%.
The US West Texas Intermediate (WTI) rose 1.13% to $ 53.81 a barrel, reaching its highest value since February, after a larger than expected drop in US oil stocks. Brent crude oil rose 1.27% to $ 57.30. [API/S]
Oil prices were also supported after Saudi Arabia said it plans to cut production by an extra 1 million barrels a day in February and March.
Some investors were monitoring events in Washington after at least three Republicans said they would join the Democrats in a vote expected on Wednesday for President Donald Trump’s impeachment because of the recent turmoil in the U.S. Capitol.
With seven days left in his term, Trump faces impeachment on charges that he incited the insurrection in a speech to his followers last week, before hundreds of them invaded the Capitol, leaving five dead. Trump says his speech was appropriate.
An impeachment trial may continue even after Trump leaves office on January 20, but analysts say they do not expect any new political turmoil in Washington to affect markets.
“The markets since the election have been very strong because the uncertainty factor has been removed,” said Peter Essele, head of portfolio management at the Commonwealth Financial Network in Boston.
The benchmark 10-year US government debt yields fell to 1.1240% on Wednesday, down from a nearly one-year high of 1.1870% reached in the previous session, following a well-received auction of new 10 years.
The interest curve, which reached the biggest slope since May 2017 due to expectations of a major fiscal stimulus under a new Democratic government, has narrowed slightly to 97.5 basis points.
The dollar fueled losses on Wednesday, as a drop in US yields offset its recent recovery.
Against the yen, the US dollar fell 0.12% to 103.65. The dollar also fell to $ 1.3683 against the pound sterling.
Safe Harbor spot gold added 0.2% to $ 1,860.13 an ounce.
Stanley White reporting in Tokyo and Chibuike Oguh in New York; Editing by Sam Holmes, Ana Nicolaci da Costa and Kim Coghill