HONG KONG – Optimism about the global economic recovery and vaccine roll-outs trumped ongoing concerns about soaring virus infections today with most Asian markets clocking up big gains.
Traders were also awaiting the Senate confirmation hearing for US Treasury secretary pick Janet Yellen, which is expected to give lawmakers a chance to go over Joe Biden's huge stimulus proposal.
US markets were closed yesterday for a public holiday, but regional investors were mostly in buoyant mood as they prepared for the new president to take office promising a vaccination blitz and a drive to kick-start the economy.
Hong Kong piled on more than 3% at one point, having jumped 1% yesterday, to levels not seen since May 2019 thanks to an inflow of cash from mainland China. The Hang Seng later pared the rally.
Seoul put on more than 2%, while Tokyo, Sydney, Mumbai, Taipei and Bangkok all rose more than 1%, while there were smaller gains in Singapore and Wellington. Shanghai, Manila and Jakarta fell, however.
US futures were in positive territory, while London, Paris and Frankfurt all opened higher.
Global coronavirus cases broke 95 million this week while deaths have topped two million, putting pressure on governments to quickly distribute vaccines while at the same time imposing strict, economically painful lockdowns.
While Biden's inauguration tomorrow is the key event for the week, traders will be keeping a close watch on Yellen's hearing, where the former Federal Reserve chief is expected to tell lawmakers the world's top economy could suffer if they do not approve a big spending plan.
"Economists don't always agree, but I think there is a consensus now: without further action, we risk a longer, more painful recession now – and long-term scarring of the economy later," she was expected to say, the Wall Street Journal reported.
"Over the next few months, we are going to need more aid to distribute the vaccine; to reopen schools; to help states keep firefighters and teachers on the job."
There are fears that Biden's US$1.9 trillion (RM8 trillion) aid package, while welcomed by markets, could face stiff opposition from fiscal conservatives as it goes through Congress, watering down many of its elements.
Investors are also concerned that the massive spending package – the third in less than a year – will lead to higher taxes.
But Axi strategist Stephen Innes said vast financial support from the Fed, government spending and the vaccine roll-out "still points to gleaming days ahead".
"It is hard not to like the sound of the Biden administration's overarching focus on public health and economic responses to the Covid-19 pandemic. A crucial part will involve distributing vaccines to hundreds of millions during the administration's first year," he said.
"Indeed, it should be the Biden administration's roll-out policy of vaccinations, not the timing of taxations that should continue to resonate."
And OANDA's Jeffrey Halley added: "With Yellen set to reinforce Biden's stimulus narrative at hearings... equities should maintain a favourable tailwind in the absence of any other news."
Key figures around 0820 GMT
Tokyo - Nikkei 225: UP 1.4% at 28,633.46 (close)
Hong Kong - Hang Seng: UP 2.7% at 29,642.28 (close)
Shanghai - Composite: DOWN 0.8% at 3,566.38 (close)
London - FTSE 100: UP 0.6% at 6,761.67
Euro/dollar: UP at US$1.2099 from US$1.2079 at 1645 GMT
Dollar/yen: UP at 104.04 yen from 103.65 yen
Pound/dollar: UP at US$1.3597 from US$1.3578
Euro/pound: UP at 88.99 pence from 88.96 pence
West Texas Intermediate: UP 0.3% at US$52.51 per barrel
Brent North Sea crude: UP 1.0% at US$55.30 per barrel. – AFP, January 19, 2021
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