Booster shot: Asian shares extend rally on vaccine hopes

Asian share markets mostly shot higher on Tuesday driven by regional airline, tourism and travel stocks as global investors applauded progress in the development of a coronavirus vaccine which lifted confidence in a world economic recovery.

Pfizer Inc said its COVID-19 vaccine, developed with German partner BioNTech SE, was more than 90 percent effective in preventing infection, marking the first successful results from a large-scale clinical trial.

“If the vaccine is proven safe, effective and being widely used, business activities are likely to resume at a much faster pace, shedding reliance to digital facilities,” Margaret Yang, strategist at trading firm IG, said in a research note sent to Al Jazeera.

“The rally in energy, financial and industrial sector alongside a fall in technology shares reflected this expectation. A faster economic recovery and a healthier jobs market may point to less support from fiscal and monetary stimulus in the medium- to long-term,” Yang said.

Japan’s Nikkei 225 rose 1.1 percent after reaching a 29-year high in early trade and Australia’s S&P/ASX 200 rose 1.6 percent.

Hong Kong’s Hang Seng index was up 1 percent in early trade but there was marginal weakness in China as the CSI300 Index slipped by 0.24 percent. MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.12 percent higher.

Airline, travel and tourism stocks across Asia were beneficiaries of the optimism prompted by the vaccine announcement.

Qantas Airways gained 8.6 percent to hit its highest level since March, Japan Airlines shot 17.6 percent higher and ANA Holdings rose 16.4 percent.

In Hong Kong, Cathay Pacific Airways shares jumped 14.9 percent, its best performance since July.

But in a sign of the hurdles still ahead of those searching for a medical solution to the coronavirus pandemic Brazil’s health regulator said on Monday it had suspended clinical trials for China’s Sinovac vaccine after adverse health effects had emerged.

“Markets will get ahead of themselves in the short term with the vaccine news but longer term it feels like it is going higher,” Ord Minnett adviser John Milroy said from Sydney.

Energy surge

Oil prices also surged on the vaccine news, posting their biggest daily percentage gain in more than five months as the vaccine news and an OPEC output deal fueled optimism about rebounding demand.

But some of that momentum fell away in Asian trade.

US crude oil fell by 1.49 percent during the Asian session to $39.69 a barrel while Brent crude slipped by 1.25 percent.

Some analysts sounded caution over the speed with which the vaccine could be implemented, likely keeping demand for energy depressed in the short term.

“The quicker a vaccine comes to the market, the sooner we can return to some form of normality with our lives, which would be constructive for oil demand,” commodities strategists at Dutch bank ING said in a research note sent to Al Jazeera.

“Realistically, however, a widely distributed vaccine is still some distance away, which means it’s unlikely to change the demand picture in the near term,” Warren Patterson and Wenyu Yao said in their note.

Early on Tuesday, Japan’s Prime Minister Yoshihide Suga instructed his cabinet to design a fresh stimulus package to help revive the nation’s flagging economy to offset the ongoing effects of coronavirus..

The stronger performance on Asian markets followed the positive lead overnight from the United States and Europe.

On Wall Street, the Dow Jones Industrial Average rose 2.95 percent, the S&P 500 gained 1.17 percent while the Nasdaq Composite dropped 1.53 percent. E-mini futures for the S&P 500 rose 0.47 percent in Asia.

Pfizer’s announcement jolted European shares to an eight-month high, building on expectations of more stable trade policies following the US election.

While stocks have also rallied on the assumption that Democrat Joe Biden would be the next US president, the top Republican in US Congress on Monday did not acknowledge Biden as president-elect, raising concerns about a rough transition of power.

Senator Mitch McConnell said in a speech that President Donald Trump was well within his rights to look into charges of election “irregularities” but did not offer any evidence of fraud.

The Australian dollar fell 0.18 percent versus the greenback at $0.7272.

The yen strengthened 0.3 percent to 105.03 per dollar, while sterling was last trading at $1.3174, up 0.09 percent on the day.

Spot gold added 0.32 percent to $1,867.6 an ounce.