By Gina Lee
Investing.com – Asian stocks were up on Monday morning, soaring to highs not seen in almost four months even amid increasing COVID-19 figures.
Investors are relying on cheap liquidity and hopes of more stimulus measures from governments to kickstart their economies. But the number of COVID-19 cases shows no signs of slowing down, with over 11.4 million global cases as of July 6 according to Johns Hopkins University data.
The World Health Organization reported the highest number of cases over a 24-hour period over the weekend, with many U.S. states reporting a spike in cases over the long holiday weekend.
China’s Shanghai Composite jumped 3.68% by 10:55 PM ET (3:55 AM GMT) and the Shenzhen Component rose 2.40%.
Hong Kong’s Hang Seng Index was up by 2.34%.
Japan’s Nikkei 225 gained 1.44%, with Yuriko Koike winning around 60% of the vote for a second term as Tokyo’s governor on Monday.
South Korea’s KOSPI rose 1.46% and the ASX 200 was up 0.14%.
Nomura analysts said in a note, “We think there is a case for raising tactical allocation on Asian equities in the context of global equity portfolios... we see a number of catalysts that could drive Asia ex-Japan equities’ outperformance over U.S. equities in the near term. Better COVID-19 trends and mobility data in economies/markets that dominate the Asia ex-Japan index should translate into faster economic recovery vs the U.S.”
But other investors remained cautious with the number of U.S. cases approaching 3 million and simmering U.S.-China tensions.
“It is very clear that the U.S. never got the COVID outbreak under control the way that other countries did. By reopening the economy too soon, we have seen a frightening increase in the pace of new cases. So markets will have to climb a wall of worry in July as economic activity likely softens from the V-shaped recovery seen over recent months. We must remember too that U.S. and China relations are deteriorating noticeably,” Robert Rennie, head of financial market strategy at Westpac, told Reuters.