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Jakarta Post

Stocks rise as investors cheer Biden transition, vaccine progress

  • Katanga Johnson and Julie Zhu


Washington/Hong Kong   /   Tue, November 24, 2020   /   05:05 pm
Stocks rise as investors cheer Biden transition, vaccine progress A screen displays Tokyo Stock Exchange share prices as a news channel features portraits of US presidential candidates Donald Trump (right) and Joe Biden (left) at a foreign exchange trading company in Tokyo on Nov. 4, 2020, as Asian markets react to early predictions following the US presidential election. (Agence France Presse/Philip Fong)

Stocks gained on Tuesday as the formal go-ahead for United States President-elect Joe Biden to begin his transition added to an already brighter mood from progress made on COVID-19 vaccines and the prospects for a speedy global economic revival.

European markets appeared set to extend optimism in Asian and US equities, with Euro Stoxx 50 futures and FTSE futures up 0.52 percent and 0.42 percent, respectively.

US General Services Administration chief Emily Murphy wrote in a letter to Biden on Monday that he can formally begin the hand-over process.

President Donald Trump tweeted that he had told his team “do what needs to be done with regard to initial protocols”, an indication he was moving toward a transition after weeks of legal challenges to the election results.

Read also: Brent hits highest since March, spurred by coronavirus vaccine hopes

US stocks also got an added boost after reports that Biden plans to nominate former Federal Reserve Chair, Janet Yellen, to become the next Treasury Secretary. Futures for the S&P 500 rose 0.73 percent in afternoon Asian trade.

The upbeat backdrop helped MSCI’s broadest index of Asia-Pacific shares outside Japan advance 0.19 percent in the afternoon trade. Australia’s S&P/ASX 200 was 1.26 percent stronger, touching its highest level in almost nine months, with energy stocks leading the pack.

Japan’s Nikkei jumped 2.47 percent, after reaching 26,186.53 by 0204 GMT, its highest since May 1991, with energy, real estate and financial shares leading the advance. Seoul’s Kospi was 0.54 percent higher while Hong Kong’s Hang Seng was steady, up 0.03 percent and Jakarta Composite Index (JCI) gained 0.85 percent.

Chinese blue-chips were an outlier, edging down 0.85 percent, as investors booked profits following recent strong gains.

Some analysts say a Biden presidency, which could mean more negotiation room for Washington and Beijing, would not make a big difference for China’s equities market, as they expected little change in broad US policy toward China.

The progress made on COVID-19 vaccines, which had underpinned Wall Street overnight, helped keep risk appetite elevated as it boosted optimism about a quicker revival for the global economy.

AstraZeneca said its COVID-19 vaccine, cheaper to make, easier to distribute and faster to scale-up than its rivals, could be as much as 90 percent effective.

“Traders are still buying into vaccine news clearance, as the end of the pandemic becomes imaginable. Recent US data restored a bit of confidence that the economy is holding up, despite surging COVID-19 infections and a painful lack of fresh fiscal stimulus,” said Kyle Rodda, a market analyst for IG Australia.

“And the news of Yellen’s possible nomination to the role of US Treasury Secretary potentially puts a very Fed-friendly uber-dove at the reins of fiscal policy.”

The dollar index, which tracks the greenback against a basket of six major rivals, nudged down to 92.406 while the euro gained 0.11 percent on the day to US$1.1853.

On Wall Street, the Dow Jones Industrial Average rose 1.12 percent overnight, the S&P 500 gained 0.56 percent while the Nasdaq Composite added only 0.22 percent, underperforming as traders rotated away from big tech names.

Oil prices added to last week’s gains as traders anticipated the vaccine news would spur a recovery in energy demand.

Read also: US IDFC to invest $2b in Indonesia’s sovereign wealth fund

“Investors are ignoring near-term headwinds, chief among which are surging global COVID infections, and instead looking ahead to next summer,” said PVM analyst Stephen Brennock.

The United States surpassed 255,000 deaths and 12 million infections since the pandemic began, with daily infections at a record near 170,000 and daily deaths around 1,500.

US crude advanced 1.28 percent to $43.61 per barrel and Brent was at $46.58, up 1.13 percent on Tuesday, while an index of commodity prices touched its highest since early March.

The yield on the benchmark 10-year notes rose slightly to 0.8619 percent.

Spot gold fell to $1,826.86 an ounce while US gold futures dropped 0.46 percent to $1,829.30 an ounce.