SYDNEY (Reuters) – Asian stocks rallied Monday as concerns about rising COVID-19 cases and vaccine supply delays were overshadowed by expectations of a $ 1.9 trillion fiscal stimulus plan to revive the US economy .
Global stock markets have hit record highs in recent days on betting that COVID vaccines will reduce global bending rates and on a stronger US economic recovery under President Joe Biden.
Still, investors are also wary of skyrocketing valuations amid questions about the vaccines’ effectiveness in curbing the pandemic and as U.S. lawmakers continue to debate a coronavirus aid package.
MSCI’s widest index of Asia-Pacific stocks outside of Japan rose slightly to 721.96, just 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 straight monthly rise.
Japan’s Nikkei rebounded from the declines in early trading and rose 0.36%.
Australian stocks were also slightly higher after the country’s drug regulator approved the Pfizer / BioNTech COVID-19 vaccine, and authorities said a phased rollout will begin late next month.
Chinese stocks rallied, with the blue-chip CSI300 index up 0.6%.
“Washington DC is in the spotlight this week,” said Stephen Innes, Axi’s Chief Global Markets Strategist.
The Biden administration sought to allay Republican concerns that their $ 1.9 trillion pandemic proposal was too expensive, with lawmakers from both parties saying they agreed getting the COVID-19 vaccine to Americans should be a priority.
Financial markets have faced a massive economic boost from the US, although disagreements have meant months of indecision in a country that suffers more than 175,000 COVID-19 cases with millions of people unemployed every day.
“Vaccine breakthroughs make it likely that life will return to function sometime in 2021, resulting in higher GDP growth and more robust corporate earnings,” said Innes.
“But increasing global COVID19 infections, new variants of the virus, tightening social distance restrictions and delays in vaccine rollout in some places all increase short-term growth risks.”
Global COVID-19 cases are heading towards 100 million with more than 2 million deaths.
Hong Kong closed off part of the Kowloon peninsula on Saturday, the first such measure the city has taken since the pandemic began.
Reports that the new British COVID variant was not only highly contagious, but arguably more deadly than the original strain, also raised additional concerns.
In the European Union, political leaders expressed widespread dismay at a delay by AstraZeneca and Pfizer Inc in delivering promised doses, with the Italian Prime Minister lashing out at the vaccine suppliers, saying delays amounted 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 major US indices closed higher this week, with the Nasdaq rising more than 4%.
Jefferies analysts said US stock markets looked overvalued, although they still remained bullish.
“For the stock market to really relax, instead of just a bull market correction, there has to be a catalyst,” said analyst Christopher Wood.
“That means either an economic downturn or a material tightening of Fed policy,” Wood said, adding that neither would likely happen anytime soon.
In currencies, the big pairs were in a tight range, while the markets awaited a meeting of the US Federal Reserve on Wednesday.
The dollar index remained stable at 90.19, with the euro at $ 1.2169, while the pound was last at $ 1.3691.
The Japanese yen was unchanged at 103.77 per dollar.
In commodities, Brent oil prices fell 12 cents to $ 55.29 a barrel and US crude oil fell 3 cents to $ 52.24.
Gold was higher with spot prices up 0.2% to 1,855.9 an ounce.
Editing by Sam Holmes and Shri Navaratnam