SYDNEY (Reuters) – Asian stock markets resumed rise on Monday as investors pinned their hopes on vaccines to end a global economic recovery, even as a possible tightening of virus rules Tokyo withdrew Japanese values from 30-year highs.
After a slow start, MSCI’s broader Asia-Pacific stock index outside of Japan rose 0.8% to reach another all-time high.
South Korea rose 2% to a record, led by the chip and automobile sectors, while Chinese blue chips added 0.3%.
Future E-Minis for the S&P 500 were stable after hitting a record as well. EUROSTOXX 50 futures were flat, while FTSE futures rose 0.4%.
Investors continue to rely on central banks to keep money cheap, while coronavirus vaccines help revive the global economy over time, although much of that optimism already has a price and the virus it continues to spread.
Japan’s Nikkei dropped its first gains by 0.4% after Prime Minister Yoshihide Suga confirmed that the government was considering a state of emergency for Tokyo and three surrounding prefectures.
Investors are cautiously watching the second-round election in Georgia for two U.S. Senate seats on Tuesday that will determine which party controls the Senate.
If Republicans win one or both, they will retain a meager majority in the House and can block legislative goals and the presidential candidates of President-elect Joe Biden.
“If Democrats win both races, Vice President-elect Kamala Harris would be the tiebreaker vote, which would give the party unified control of the White House and Congress,” CBA analysts noted.
“This would increase the likelihood that the material infrastructure spending package on U.S. infrastructure will be accelerated through Congress.”
The minutes of the December meeting of the Federal Reserve scheduled for Wednesday should provide more details on discussions on how to make more explicit its future policy direction and the possibility of a further increase in asset purchases this year.
APPOINT A RISK
The data schedule includes a wealth of manufacturing surveys around the world, which will show how the industry copes with the spread of coronavirus and highly monitored ISM surveys of U.S. factories and services.
Activity at Chinese factories continued to accelerate in December, although the PMI lost forecasts to 53.0.
Japan’s manufacturing activity stabilized for the first time in two years in December, while Taiwan recovered.
The December payroll report for the United States is presented on Friday, where average forecasts represent only a modest increase of 100,000.
Analysts like Barclays are assuming a drop of 50,000 jobs, which would be a shock to market expectations of a speedy recovery.
“Several incoming activity indicators point to a slower momentum as the economy closes the year, including data on labor markets where initial demand increased during the December survey period,” he said. say economist Michael Gapen in a note.
This fall would add pressure on the Fed to cut even further, another burden for the dollar that is already falling under the weight of the massive U.S. budget and trade deficits.
The dollar index stood last at 89,704, not far from its recent low of 89,515, which lost almost 7% in 2020.
The euro fell back to $ 1.2252, after having had profits late last week, when it peaked since early 2018, at $ 1.2309. It gained almost 9% compared to 2020.
The dollar fell to 103.02 yen and seemed in danger of testing key support at 102.55. The pound sterling was confirmed at $ 1.3690, levels that were last seen in mid-2018.
In the cryptocurrency space, Bitcoin remained at $ 33,102, after hitting an all-time high of $ 34,800.
The fall in the dollar has been a support for gold, leaving the metal 1% firmer at $ 1,917 an ounce.
Oil prices have stabilized after a couple of months of solid gains, with Brent resistance around $ 52.50 a barrel. The rebound still left Brent down 21.5% during the year and WTI 20.5%. [O/R]
On Monday, futures on Brent crude rose 36 cents to $ 52.16, while U.S. crude added 32 cents to $ 48.84 a barrel.
Edited by Jane Wardell and Kenneth Maxwell