SYDNEY (Reuters) – Asian stocks climbed to nearly all time Monday as concerns about surging COVID-19 cases and delays in vaccine supplies were overshadowed by optimism about a $ 1.9 trillion fiscal stimulus plan to revive the U.S. economy to blow in.
Sentiment in the region was also bolstered by a report that China had surpassed the United States to be the largest recipient of foreign direct investment by 2020 with an inflow of $ 163 billion.
Futures markets also pointed to a firmer start elsewhere. E-mini futures for the S&P 500 were up 0.37%, futures for eurostoxx 50 and the London FTSE were each up 0.3%, while those for the German DAX were up 0.4%.
“The FDI story has certainly boosted China and its closest neighbors today, fueling an economic recovery in geographically adjacent markets,” said OANDA’s Singapore-based market analyst Jeffery Halley.
“Looking ahead, stocks will receive more meaningful responses to the progress or not of the Biden stimulus package and the degree of moderation shown by the Federal Reserve at their FOMC meeting this week.”
Global stock markets have hit record highs in recent days on bets that COVID-19 vaccines will start to lower infection rates worldwide 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 Japan rose to 726.46, within kiss distance of last week’s record high of 727.31.
The benchmark is up nearly 9% so far in January, on track for its fourth straight monthly rise.
Japan’s Nikkei rebounded from the declines in early trading to 0.7%.
Australian stocks added 0.4% after the country’s drug regulator approved the Pfizer / BioNTech COVID-19 vaccine with a staged rollout likely late next month.
Chinese stocks rallied, with the blue-chip CSI300 index up 1.1%. Hong Kong’s Hang Seng index jumped nearly 2%, led by technology stocks.
All eyes are on Washington DC as US lawmakers agreed that getting the COVID-19 vaccine in Americans should be a priority, even as they shut horns on the magnitude of the US pandemic relief package.
Financial markets have watched a huge package, although disagreements have meant months of indecision in a country with over 175,000 COVID-19 cases per day with millions of people unemployed.
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 as the markets waited for the Fed meeting on Wednesday.
The dollar index fell to 90,073, with the euro at $ 1.2181, while the pound was last firmer at $ 1.3721.
The Japanese yen was a lot weaker at 103.69 per dollar.
In terms of commodities, Brent gave up early losses to last stable at $ 55.41 a barrel and US crude oil rose 3 cents to $ 52.30.
Gold was stable at $ 1,852.9 an ounce.
Edited by Shri Navaratnam and Jacqueline Wong