Asia shares hit record on vaccine hopes; oil up ahead of meeting

Asian share markets resumed their ascent on Monday as investors pinned their hope on vaccines to eventually deliver a global economic upturn, even as a possible tightening of virus rules for Tokyo pulled Japanese stocks off 30-year highs.

After a slow start, MSCI’s broadest index of Asia-Pacific shares outside Japan swung 0.8 percent higher to hit another all-time peak.

South Korea climbed 2 percent to a record, led by the computer chip and automotive sectors, while Chinese blue chips added 0.3 percent.

But shares of China’s three largest telecommunications companies fell by as much as 5 percent in Hong Kong in their first trading session since the New York Stock Exchange (NYSE) said it would delist the firms under a plan China branded “political” and of “limited” effect.

The NYSE on Thursday said it would delist China Mobile Ltd, China Telecom Corp Ltd and China Unicom Hong Kong Ltd following the United States government’s move in November to block investment in 31 firms that it said are owned or controlled by China’s military.

E-Mini futures for the US S&P 500 index were steady after also touching a record high. EUROSTOXX 50 futures were flat, while United Kingdom’s FTSE futures rose 0.4 percent.

Investors are still counting on central banks to keep money cheap while coronavirus vaccines help revive the global economy over time, though much of that optimism is already reflected in share prices and the virus is still spreading.

Japan’s Nikkei shed early gains to fall 0.4 percent after Prime Minister Yoshihide Suga confirmed the government was considering a state of emergency for Tokyo and three surrounding prefectures.

Oil in focus

Oil prices have steadied after a couple of months of solid gains, with Brent crude meeting resistance about $52.50 a barrel. The rebound still left Brent down 21.5 percent for the year and WTI 20.5 percent.

On Monday, Brent crude futures rose 36 cents to $52.16, while US crude added 32 cents to $48.84 a barrel.

The alliance of the world’s top oil exporters, known as OPEC+, is due to decide on Monday whether it can keep raising output even as surging coronavirus infections hurt global energy demand.

Investors are cautiously watching runoff elections on Tuesday in the US state of Georgia for two Senate seats that will determine which party controls the chamber.

If the Republicans win one or both, they will retain a slim majority in the chamber and can block President-elect Joe Biden’s legislative goals and judicial nominees.

“If Democrats win both races, Vice President-elect Kamala Harris would be the tie-breaking vote, giving the party unified control of the White House and Congress,” noted analysts at investment firm CBA.

“This would raise the likelihood a material US infrastructure spending package gets fast-tracked through Congress.”

Minutes of the US Federal Reserve’s December meeting due on Wednesday should offer more detail about the chances of further increases in asset-buying this year to support the US economy.

Payrolls a risk

The data calendar includes a raft of manufacturing surveys across the globe, which will show how the industry is coping with the spread of the coronavirus and the closely watched Institute for Supply Management surveys of US factories and services.

Chinese factory activity continued to accelerate in December, though the purchasing managers’ index (PMI) missed forecasts at 53.0.

“The latest manufacturing surveys suggest that factory activity remained strong in December but that the pace of expansion has started to ease,” Julian Evans-Pritchard, a senior China economist at Capital Economics said in a research note sent to Al Jazeera.

Japan’s factory activity stabilised for the first time in two years in December, while Taiwan picked up.

Friday sees the release of the US December payroll report for which median forecasts are for a modest increase of 100,000 new jobs.

Analysts at Barclays are betting on a fall of 50,000 jobs, which would be a shock to market hopes of a speedy recovery.

“A number of incoming indicators on activity point to slower momentum as the economy closes out the year, including data on labour markets where initial claims rose during the December survey period,” said Barclays economist Michael Gapen in a note.

Such a drop would add pressure on the Federal Reserve to ease further, another burden for the dollar which is already buckling under the weight of the enormous US budget and trade deficits.

The dollar index was last at 89.704, not far from its recent two-and-a-half-year low of 89.515 having shed almost 7 percent in 2020.

The euro pushed back up to $1.2252, having run into profit-taking late last week when it reached its highest level since early 2018 at $1.2309. It gained almost 9 percent over 2020.

The dollar slipped to 103.02 Japanese yen and looked like it was in danger of testing key support at 102.55. The British pound firmed to $1.3690, levels last seen in mid-2018.

In the cryptocurrency space, Bitcoin steadied at $33,102, after touching an historic high of $34,800.

The decline in the dollar has been a support for gold, leaving the metal 1 percent firmer at $1,917 an ounce.