Stocks rise as Biden transition, vaccine progress lift confidence

WASHINGTON/HONG KONG: Asian shares climbed on Tuesday as news U.S. President-elect Joe Biden was given the go-ahead to begin his White House transition added to an already brighter mood from progress made on COVID-19 vaccine and the prospects for a speedy global economic revival.

U.S. General Services Administration chief Emily Murphy wrote in a letter to Biden on Monday that he can formally begin the hand-over process.

President Donald Trump tweeted that he had told his team “do what needs to be done with regard to initial protocols”, an indication he was moving toward a transition after weeks of legal challenges to the election results.

U.S. stocks also got an added boost after reports that Biden plans to nominate former Federal Reserve Chair, Janet Yellen, to become the next Treasury Secretary. Futures for the S&P 500 rose 0.48% in early Asian trade.

The upbeat backdrop helped MSCI’s broadest index of Asia-Pacific shares outside Japan advance 0.15%. Australia’s S&P/ASX 200 was 1.1% stronger, touching its highest level in almost nine months, with energy stocks leading the pack.

Japan’s Nikkei jumped 2.48% while Seoul’s Kospi was 0.74% higher.

Chinese blue-chips and Hong Kong’s Hang Seng were however outliers, edging down 0.75% and 0.08%.

The progress made on COVID-19 vaccines, which had underpinned Wall Street overnight, helped keep risk appetite elevated as it boosted optimism about a quicker revival for the global economy.

AstraZeneca said its COVID-19 vaccine, cheaper to make, easier to distribute and faster to scale-up than its rivals, could be as much as 90% effective.

“Traders are still buying into vaccine news clearance, as the end of the pandemic becomes imaginable. Recent U.S. data restored a bit of confidence that the economy is holding up, despite surging COVID-19 infections and a painful lack of fresh fiscal stimulus,” said Kyle Rodda, a market analyst for IG Australia.

“And the news of Yellen’s possible nomination to the role of U.S. Treasury Secretary potentially puts a very Fed-friendly uber-dove at the reins of fiscal policy.”

The U.S. dollar index touched its lowest since Sept. 1 before edging 0.214% higher with the euro unchanged at $1.184.

On Wall Street, the Dow Jones Industrial Average rose 1.12% overnight, the S&P 500 gained 0.56% while the Nasdaq Composite added only 0.22%, underperforming as traders rotated away from big tech names.

Some analysts expect big, short-term risks ahead of the U.S. Thanksgiving holiday, although others say unexpected news events at the start of the shorter trading week helped investors focus on the growing positives for financial markets.

Oil prices added to last week’s gains as traders anticipated the vaccine news would spur a recovery in energy demand.

“Investors are ignoring near-term headwinds, chief among which are surging global COVID infections, and instead looking ahead to next summer,” said PVM analyst Stephen Brennock.

The United States surpassed 255,000 deaths and 12 million infections since the pandemic began, with daily infections at a record near 170,000 and daily deaths around 1,500.

U.S. crude advanced 0.14% to $43.12 per barrel and Brent was at $46.10, up 0.09% on Tuesday, while an index of commodity prices touched its highest since early March.

The yield on the benchmark 10-year notes rose slightly to 0.8684%.

Spot gold fell to $1,827.01 an ounce while U.S. gold futures dropped 0.46% to $1,829.30 an ounce.