Stocks across the Asia-Pacific region have rallied as investors cheered by the results of a US trial for a coronavirus vaccine and hoped that economies around the world could gradually begin to reopen as severe closings would be relaxed.
This optimism has helped to overshadow growing concerns about a deepening of the US-China divide, with Huawei emerging as an important source of tension. In the latest development, the Chinese telecommunications company has warned that further sanctions from Washington are jeopardizing its survival.
Hong Kong’s benchmark, Hang Seng, rose 2.1% at noon on Tuesday, while the Chinese CSI 300 index of stocks listed in Shanghai and Shenzhen rose 0.6%. The Japanese Topix index rose 1.7% and the Australian S & P / ASX 200 gained 1.8%.
This follows a dynamic session on Wall Street, where the S&P 500 rose 3.2% to reach its highest level since early March. Sentiment was shot in the arm after biotechnology company Moderna said its potential Covid-19 vaccine had shown positive results in the first small-scale human trials.
Expectations for an economic rebound from the pandemic, in part due to robust support from major central banks, have contributed to a sharp rise in global equity markets. The S&P 500 is up about a third from a low reached in late March.
Policymakers in Germany said this week that there were indications “a recovery is underway”, increasing the possibility of stronger than expected performance for European economies as they resume commercial and industrial activities.
However, futures markets suggested that the stock market rebound could collapse when trading begins on Wall Street later today, with the S&P 500 expected to drop 0.4%. London’s FTSE 100 is expected to fall 0.3%.
Oil prices also lost momentum after a rally on Monday spurred by signs of recovery in crude demand and OPEC-led supply cuts that had started to take effect.
West Texas Intermediate, the US marker, rose 0.4% to $ 31.94 a barrel after jumping 8% a day earlier and returning above the $ 30 mark for the first time since mid-March. Crude oil Brent, the international benchmark, fell 0.6% to $ 34.59 a barrel.