Shot in the arm: Stocks get a vaccine boost as US jobs data loom
Encouraging results from a human trial on a new coronavirus vaccine raise hopes of a swift economic recovery.
Stocks tracked Wall Street higher on Thursday although sentiment was cautious in advance of the United States employment data, while copper prices jumped to more than six-month highs on a better global outlook and supply fears in top producer Chile.
MSCI’s broadest index of Asia Pacific shares outside of Japan rose 0.9 percent with all major indexes trading higher on hopes of a vaccine for COVID-19, which has killed more than half-a-million people globally and shut down the world economy.
Japan’s Nikkei share index rose 0.4 percent, China’s blue-chip index added 0.6 percent while Hong Kong’s Hang Seng index climbed 1.7 percent.
In a sign the positive sentiment will extend elsewhere, E-minis for the US S&P 500 rose 0.3 percent while futures for the Euro Stoxx 50 index rose 0.8 percent and those for Germany’s DAX climbed 0.8 percent. London’s FTSE futures added 0.6 percent.
The US employment figures due later in the day are expected to show if the world’s largest economy can sustain its fragile recovery, as new COVID-19 cases accelerate in several southern states.
Economists polled by Reuters news agency expect private employers to have added 2.9 new million new jobs in June, which would follow a surprise increase in May. Casting some doubt over that projection, however, was a smaller-than-expected increase in jobs seen in the report by payroll services firm ADP on Wednesday.
“A better-than-expected outcome could go some way to settling the near-term debate that the US labour market will heal relatively quickly and justify new highs in US equities,” said Stephen Innes, strategist at AxiCorp.
Wall Street ended on Wednesday higher after key economic indicators showed a rebound in Chinese manufacturing activity as it recovers from the pandemic while sharp declines in European factory activity eased.
Risk sentiment was whetted by a COVID-19 vaccine from Pfizer and Germany’s BioNTech, which was found to be well tolerated in early-stage human trials.
Equity investors shrugged off concerns about Hong Kong where police arrested more than 300 people protesting against sweeping new laws introduced by China to snuff out dissent.
Those developments have raised concerns about China’s already strained relations with its major western trading partners, particularly the US.
The US House of Representatives passed legislation on Wednesday that would penalise banks doing business with Chinese officials who implement a national security law.
In commodities, the most-traded August copper contract on the Shanghai Futures Exchange touched 49,570 yuan ($7,016.28) a tonne, its highest since December 30, 2019.
Factories on the mend
Manufacturing activity rebounded in the US in June, while the factory sector in Germany, Europe’s largest economy, contracted at a slower pace and top copper consumer China posted better-than-expected manufacturing data.
Meanwhile in Chile, where the number of COVID-19 cases has been climbing, miner BHP said it would begin to slow production at its small Cerro Colorado copper mine in the country.
Elsewhere, oil prices eased and gold was a tad softer too while the dollar was steady in a sign of investor caution despite encouraging macroeconomic data.
Brent crude slipped 6 cents to $41.97 a barrel. US crude was off 12 cents at $39.70 a barrel. US gold futures were 0.12 percent lower, at $1,777.70.
The safe haven US dollar was unchanged against the Japanese yen at 107.45. The euro barely moved too and was last traded at $1.1254 while sterling was treading water at $1.2477.
That left the dollar index at 97.139.