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Asian Stocks Advance After U.S. Rally; Oil Gains: Markets Wrap

Asian stocks rose Tuesday, spurred by a surge on Wall Street, after early results for an experimental vaccine sparked speculation economies could snap back quickly. Oil extended gains and Treasury yields held near five-week highs.
Bloomberg
By Bloomberg
19 May
Manhattan As Cuomo Orders 75% Of New Yorkers To Stay Home From Work A monitor displaying a Bloomberg Television broadcast is seen through the window of the Nasdaq MarketSite in the Times Square neighborhood of New York, U.S., on Thursday, March 19, 2020. New York state Governor Andrew Cuomo on Thursday ordered businesses to keep 75% of their workforce home as the number of coronavirus cases rises rapidly.

Equities rose more than 1% across Asia, with Tokyo, Sydney and Hong Kong outperforming, though the magnitude was less than in the U.S. Contracts on the S&P 500 dipped after a report that Nasdaq would tighten IPO rules, affecting some Chinese companies. Monday, the U.S. benchmark jumped the most in almost six weeks after Moderna Inc. said its vaccine tests yielded signs it can create an immune-system response in the body. Oil consolidated above $30 a barrel.

Vaccine optimism lifts major U.S. equity benchmarks to third day of gains

The risk-on rally comes as more economies around the world and within the U.S. ease restrictions that created one of the steepest downturns since the Depression. Federal Reserve Chairman Jerome Powell is scheduled to speak on the state of the recovery Tuesday, amid expectations he’ll press for further fiscal support.

“Short-lived bounces in stock prices even while markets establish new lows are not unheard of,” Ashwin Alankar, head of global asset allocation at Janus Henderson, said in a note. “Forward-looking metrics such as earnings revisions and options prices, on the other hand, sound a more cautious tone both for the economy and stock prices.”

Among the headwinds for stocks is a deteriorating U.S.-China relationship. In a further sign of tightening scrutiny on capital flows to China, Reuters reported that Nasdaq is set to to unveil new rules on initial public offerings that will make it more difficult for some Chinese companies to list on the exchange. That follows moves in Washington to halt investments by a retirement plan into the stocks of Chinese firms.

Stocks

  • S&P 500 futures were down 0.1% as of 10:30 a.m. in Tokyo. The S&P 500 Index surged 3.2%. The Dow Jones Industrial Average climbed 3.9% and the Nasdaq Composite Index rose 2.4%.
  • Topix index gained 1.8%.
  • Australia’s S&P/ASX 200 Index rose 2.1%.
  • South Korea’s Kospi index rose 1.8%.
  • Hong Kong’s Hang Seng Index advanced 2.2%.
  • Shanghai Composite Index rose 0.8%.

Currencies

  • The Japanese yen was at 107.40 per dollar, little changed.
  • The offshore yuan traded at 7.1191 per dollar.
  • The Bloomberg Dollar Spot Index was flat after sinking 0.7%.
  • The euro was at $1.0913.
  • The British pound was at $1.2211, up 0.1%.

Bonds

  • The yield on 10-year Treasuries fell one basis point to 0.71% after jumping eight basis points in the previous session.
  • Australia’s 10-year bond yield climbed four basis points to 0.96%.

Commodities

  • West Texas Intermediate crude climbed 2.6% to $32.65 a barrel.
  • Gold rose 0.3% to $1,737.53 an ounce.

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