Dec 07, 2020: Asian markets mostly fell Monday following last week's rally as investors prepare for a big week that could see the vaccine rollout begin in earnest and US lawmakers agree a new stimulus, while post-Brexit trade talks remain on a knife-edge.
But while the general consensus is for a strong recovery in 2021 as billions are inoculated, the surge in virus cases around the world and ongoing China-US tensions continue to keep a lid on sentiment.
Regional traders were unable to build on last week's advances, despite all three Wall Street indexes chalking up records Friday thanks to signs of movement in US stimulus talks and hopes for the vaccine.
Optimism US lawmakers will finally agree a rescue package was given a boost Friday with data showing the world's top economy created far fewer jobs than forecast in November as the country is battered by a frightening jump in infections that is forcing leaders to impose containment measures.
Senate Republican Leader Mitch McConnell and Democratic House Speaker Nancy Pelosi have revived efforts to hash out a deal for more aid, with both recognising the need for help for Americans as Christmas approaches.
Senators and their teams worked all weekend on a detailed bill, which “will probably come out early this week”, Republican senator Bill Cassidy told “Fox News Sunday”.
Pelosi has agreed to make the proposal the basis for negotiations on a final text.
Traders are also keeping tabs on the deployment of vaccines around the world, with Britain in line to start giving jabs this week, while US approval of its first drug could come as soon as Friday. Belgium, France and Spain have said jabs will begin in January for the most vulnerable.
“The deployment of vaccines is getting closer” and this is “continuing to help share markets look through the current problems with the virus and its economic impact”, said Shane Oliver, at AMP Capital Investors.
– Brexit talks go to wire –
The World Health Organization said 51 candidate vaccines are currently being tested on humans, with 13 reaching final-stage mass testing.
Stephen Innes, of Axi, said with the vaccine rally largely priced into stock prices now, gains would now likely be driven by “the pace of vaccinations versus the Covid resurgence speed, similar to how shifts in mobility drove equities through the spring and summer”.
He added that “as the market takes out new highs, investors sitting on the fence may be forced to react, not wanting to miss out on the pot of gold that lies at the other end of the vaccine reopening rainbow”.
Still, markets struggled to push ahead in Asia Saturday.
Hong Kong fell 1.8 percent and Shanghai sank 0.5 percent and Tokyo slipped 0.4 percent along with Seoul. Wellington and Singapore were barely moved but Sydney, Taipei, Manila and Jakarta rose.
Sentiment was given a jolt by reports that the US is considering fresh sanctions on several Chinese officials over their roles in the disqualification of lawmakers in Hong Kong, as Donald Trump presses ahead with his fight against Beijing before leaving office.
Sterling edged up slightly against the dollar as Britain and the European Union continue with talks on a trade deal for when Britain leaves the customs union on December 31.
EU lead negotiator Michel Barnier and his UK counterpart David Frost worked late into Sunday in Brussels, scrambling to close out a deal after eight months of fraught talks.
Ireland's Prime Minister Micheal Martin warned the chances for a deal were only “50-50”, while sources close to the talks said discussions were slow and expectations low.
“The risk of a no-deal Brexit is so underpriced that it could always provide a significant sentiment knocker if the deal falls to pieces,” said Axi's Innes.
– Key figures around 0250 GMT –
- Tokyo – Nikkei 225: DOWN 0.4 percent at 26,645.23 (break)
- Hong Kong – Hang Seng: DOWN 1.8 percent at 26,355.79
- Shanghai – Composite: DOWN 0.4 percent at 3,429.67
- Pound/dollar: UP at $1.3433 from $1.3423
- Euro/dollar: UP at $1.2137 from $1.2110 at 2200 GMT Friday
- Dollar/yen: DOWN at 103.98 yen from 104.19 yen
- Euro/pound: UP at 90.35 pence from 90.21 pence
- West Texas Intermediate: DOWN 0.7 percent at $45.95 per barrel
- Brent North Sea crude: DOWN 0.6 percent at $48.94 per barrel
- New York – Dow: UP 0.8 percent at 30,218.26 (close)
- London – FTSE 100: UP 0.9 percent at 6,550.23 (close)