Stock markets resume rally as traders focus on virus jabs

HONG KONG: Markets rallied Tuesday as investors resumed their vaccine-fuelled buying spree, though traders were kept in check by the spectre of surging virus infections.

Equities fell across the world Monday after November's blockbuster rally -- the Dow in New York enjoyed its best month in almost 34 years -- that came in response to better-than-expected results from several coronavirus drugs and hopes they will begin to be rolled out before the end of the year.

Analysts said the prospect that millions of people will start getting a jab within weeks will allow traders to bet on a strong recovery in the world economy next year.

News that a gauge of Chinese manufacturing activity had hit a 10-year high added to the upbeat mood.

"I feel pretty confident that portfolios should be positioned for continued good performance from equity markets as we head into 2021," Chris Iggo, at AXA Investment Managers, said.

Shanghai led gains, surging 1.8 percent while Tokyo, Sydney, Seoul, Taipei, Jakarta and Bangkok also jumped more than one percent. Manila soared more than three percent.

Hong Kong climbed 0.9 percent a day after dropping more than two percent as the city sees a new spike in infections that has forced leaders to reimpose containment measures, while Mumbai and Singapore also enjoyed gains.

London, Paris and Frankfurt all started with healthy gains.

"Flashing green lights at the end of the tunnel suggest investors should look through the immediate Covid-19 concerns and focus on the future, which seems incredibly bright and bullish," said Axi's Stephen Innes.

However, he added a note of caution that "one cannot be certain what the landscape will look like on the other side".

The spread of the virus is causing most unease as the US suffers a huge surge in cases and President Donald Trump's top infectious disease expert warns of a fresh wave within weeks after millions of Americans travelled over Thanksgiving.

And Federal Reserve boss Jerome Powell warned: "The rise in new Covid-19 cases, both here and abroad, is concerning and could prove challenging for the next few months."

He told the Senate Banking Committee: "A full economic recovery is unlikely until people are confident that it is safe to reengage in a broad range of activities."

'Stupidity on steroids'

Powell has for months been urging US lawmakers to agree a new stimulus for the beleaguered economy and while some were making the right noises, there remains little movement in the right direction.

"The American people need more help now. Congress should deliver more COVID relief this year," tweeted Republican Senate Majority Leader Mitch McConnell, while his Democratic opposite Chuck Schumer said negotiating a new relief bill was a priority.

Both sides blame the other for the lack of a deal.

Democratic Senator Mark Warner told MSNBC it would be "stupidity on steroids" not to pass a bill before the festive break and expressed anger that people will lose their unemployment benefits "the day after Christmas".

Oil prices fell again as traders fret over a lack of news in talks between OPEC and other top producers on extending output cuts, just as the spike in new infections fuels worries about another hit to demand.

The talks were adjourned with no decision and Tuesday's discussions "won't be easy", said Iran's oil minister Bijan Namdar Zanganeh.

"Some countries oppose extending the production reduction agreement It will be difficult to come to an agreement," he was quoted by his ministry as saying.

The cryptocurrency hit $19,857, topping its previous all-time high set just before Christmas 2017, which came after a breakneck rally that was immediately followed by a collapse that was equally as quick.

It has piled on more than 170 percent since the start of the year, helped by PayPal online payments giant saying it would enable account holders to use the unit.

"Bitcoin's moment has arrived," said Guy Hirsch, managing director for the US at trading platform eToro, pointing to institutional involvement as a key reason for the latest advance.

"This rally could still have quite a way to go."