Markets rose in Asia on Wednesday thanks to U.S. stimulus talks, Brexit hopes and the deployment of the Covid-19 vaccine, but a surge in virus cases and lockdown measures continued to provoke a standoff between the long term optimism and short term pain.
After months of stuttering talks among lawmakers in Washington, there appear to be signs of progress on a new bailout for the world’s largest economy as they discuss a bipartisan package.
Senior politicians on both sides remain locked in talks to resolve their differences before the end of the year, when millions of Americans could lose crucial support.
Lawmakers are working on a plan that eliminates two contentious issues that had prevented Democrats and Republicans from reaching a deal, while also seeking to tie any new package when passing a so-called omnibus bill to keep government funding.
“We are making significant progress and I am optimistic that we will be able to reach a deal very soon,” Senate Majority Leader Mitch McConnell said on Tuesday.
“Everyone wants to get a final deal as quickly as possible. “
Hopes of a breakthrough helped spark a rally on Wall Street on Tuesday, with all three major indices ending more than one percent higher.
This has helped Asia record healthy gains, helping to cut losses after a weak start to the week.
Tokyo, Hong Kong, Sydney, Seoul, Mumbai, Singapore and Wellington all advanced, while Taipei, Manila and Jakarta registered more than one percent. Bangkok and Shanghai were flat.
London, Paris and Frankfurt all stood up at the opening.
Hopes that the economy could get back on track next year were heightened on Tuesday when the European Medicines Agency announced it had held a meeting to decide whether to authorize the Pfizer-BioNTech vaccine for more than one week until December 21.
The drug is already administered in Great Britain, the United States and Canada.
– Christmas cheers from traders –
It came as the United States Food and Drug Administration recommended that experts give the green light later this week to a second vaccine, produced by Moderna.
“Progress on an economic bailout plan for Washington, optimism over the Brexit deal that could take hold by the end of the week, and the likely transparent rollout of several highly effective vaccines have mixed to paint commercial screens Christmas green, ”Axi strategist Stephen Innes said.
The gains came “despite the many headwinds due to both the spread of the virus and the risk of increasingly stringent mobility restrictions,” he added.
The need for a large vaccine rollout has been laid bare by skyrocketing infection and death rates around the world, which has led governments to impose strict containment measures before the Christmas holidays.
But Rodrigo Catril of the Australian National Bank noted: “The prospect of tighter lockdowns in Europe and the United States is not enough to derail the positive vibes. “
Traders were also awaiting the conclusion of the Federal Reserve’s latest policy meeting later today, hoping to get advice on its monetary policy plans for the new year.
In currency markets, the pound has built on recent gains as UK and EU negotiators continue to negotiate a post-Brexit trade deal.
Investors were enthused by a tweet from Nicholas Watt, the BBC’s senior political editor, that “UK is heading for a Brexit deal with the EU”, fueling hopes for a breakthrough in the near future.
Catril added: “We have long expected a deal, and we have ignored the political posture, and a positive outcome would see more strength” in sterling.
– Key figures around 0820 GMT –
Tokyo – Nikkei 225: + 0.3% at 26,757.40 (close)
Hong Kong – Hang Seng: + 1.0% to 26,460.29 (closing)
Shanghai – Composite: FLAT at 3366.98 (closed)
London – FTSE 100: + 0.3% at 6,533.23
Pound / dollar: UP to $ 1.3478 from $ 1.3457 at 9:50 p.m. GMT
Euro / pound: UP to 90.27 pence from 90.36 pence
Euro / dollar: UP to $ 1.2168 from $ 1.2159
Dollar / yen: LOW at 103.45 yen vs. 103.61 yen
West Texas Intermediate: Down 0.3% to $ 47.50 per barrel
North Sea Brent: Down 0.3% to $ 50.61 per Barrel
New York – Dow: + 1.1% to 30,199.31 (close)
and / rbu
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