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Asia gains after Wall Street vaccine push

Chibuike Oguh
·2-min read

Asian stocks have opened firmer after the S&P 500 and Dow Jones indexes hit record highs on news of another promising coronavirus vaccine supporting hopes of quicker economic recovery.

Investor sentiment shot up after Moderna Inc said its experimental COVID-19 vaccine was 94.5 per cent effective in preventing infection based on interim late-state data.

The Massachusetts-based firm became the second drugmaker after Pfizer Inc to announce promising trial data in the development of a vaccine to defeat the pandemic. Its shares gained 9.6 per cent on the day.

"This is a continuation of what we saw last week as the vaccine being a catalyst for a rotation into cyclical sectors such as energy, financials and defence with expectations for renewed demand and travel," said Thomas Hayes at Great Hill Capital in New York.

Australia's S&P/ASX 200 rose 0.6 per cent in early trading, while Hong Kong's Hang Seng index futures gained 0.27 per cent. Japan's Nikkei 225 climbed 0.5 per cent.

All three main Wall Street indexes advanced on Monday, with the Dow Jones Industrials Average setting a record as it neared the 30,000 mark for the first time in nine months.

The benchmark Dow is the last of the three to reclaim levels reached in February, before lockdowns sent the markets into free-fall. The S&P 500 surpassed its own record set on Friday.

Cyclical and small cap names, which generally benefit the soonest as an economy recovers from recession, led the way, with energy, industrials and financials the top-performing sectors.

Travel-related stocks, which have been clobbered by lockdowns, were also in demand.

Shares of United Airlines Holdings Inc, American Airlines Group Inc , Carnival Corp and Norwegian Cruise Line Holdings Ltd jumped between 4.5 per cent and 9.7 per cent.

"The light switch has really be turned on and this is the real deal unlike some months back," Hayes said.

On Wall Street, the Dow Jones Industrial Average rose 1.6 per cent, the S&P 500 gained 1.16 per cent, and the Nasdaq Composite 0.8 per cent.

Oil prices rose on the prospects of an end of pandemic restrictions that have hit demand.

Prices were also buoyed by data showing a rebound in China and Japan, with figures showing Chinese refineries processed record daily levels of crude in October.

US crude settled up 3.02 per cent at $US41.34 per barrel and Brent was at $US43.82, up 2.43 per cent on the day.

US Treasury yields rose on Monday and the yield curve steepened in the wake of vaccine developments. Benchmark 10-year notes last fell 5/32 in price to yield 0.9094 per cent, from 0.893 per cent late on Friday.