Asia report: Markets finish higher on fresh vaccine hopes

Markets in Asia finished higher across the board on Tuesday, as investors reacted to the news that the European Commission would use financial markets to raise €750bn for its Covid-19 response.

In Japan, the Nikkei 225 was up 0.73% at 22,884.22, as the yen weakened 0.03% against the dollar to last trade at JPY 107.30.

Of the major components on the benchmark index, robotics specialist Fanuc was up 0.43%, Uniqlo owner Fast Retailing added 1.26%, and technology giant SoftBank Group was 3.06% higher.

The broader Topix index was 0.36% firmer by the end of trading in Tokyo, closing at 1,582.74.

On the mainland, the Shanghai Composite managed gains of 0.2% to 3,320.89, and the smaller, technology-centric Shenzhen Composite added 0.72% to 2,232.70.

A fresh report from Moody’s on Tuesday suggested earnings for companies in China were set to grow slower, and possibly decline, in the current year in the wake of the Covid-19 outbreak, before a recovery in 2021.

It said the most affected sectors will be automotive and its related industries, as well as oil and gas and oilfield services.

“We expect credit quality will weaken, especially for companies in vulnerable sectors that are most affected by reduced revenues, margins and disrupted supply chains,” said Moody’s senior vice-president Lina Choi.

South Korea’s Kospi advanced 1.39% to 2,228.83, while the Hang Seng Index in Hong Kong gained 2.31% to 25,635.66.

The blue-chip technology stocks were both higher in Seoul, with Samsung Electronics up 2.03%, and chipmaker SK Hynix rising 2.31%.

Sentiment was rosy from the start of the Asian session, after technology plays on Wall Street put in a strong showing overnight.

From that side of the Atlantic, the Pfizer and BioNTech coronavirus vaccine programme reported positive early data, just hours after similar news came out of the AstraZeneca and Oxford University trial in the UK.

Later in the session, it emerged that European leaders had reached agreement over new Covid stimulus, after four days of talks in Brussels.

The EC will use financial markets to raise €750bn, to be distributed among the most affected countries and sectors via both grants and loans.

“Markets were booster shot-ed by positive news from AstraZeneca regarding the progress of their Covid-19 vaccine,” said Oanda senior Asia-Pacific market analyst Jeffrey Halley.

“The European Union also lent a helping hand, edging towards a workable pandemic recovery package.

“The net effect immune boosted equities and commodities, and spurred a new wave of US dollar rotation, as the street priced in more light at the end of the pandemic economic tunnel.”

Oil prices were higher at the end of the Asian day, with Brent crude last up 1.78% at $44.05 per barrel, and West Texas Intermediate rising 1.64% to $41.59.

In Australia, the S&P/ASX 200 was up 2.58% at 6,156.30, as the hefty financials subindex advanced 2.9%.

The big four banks were in the green, with Australia and New Zealand Banking Group up 2.58%, Commonwealth Bank of Australia ahead 3.39%, National Australia Bank rising 2.53%, and Westpac Banking Corporation gaining 2.49%.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 was up 1.59% at 11,736.73, with the aviation sector outperforming the market in Wellington.

Airport operator AIAL was up 3.7%, and flag carrier Air New Zealand ended the session 2.7% firmer.

Both of the down under dollars were stronger on the greenback, with the Aussie last ahead 0.55% at AUD 1.4174, and the Kiwi advancing 0.09% to NZD 1.5191.