Asia investors push most markets higher but Covid-19 fears remain

Hong Kong led gains in Asia, rallying more than one per cent.
Hong Kong led gains in Asia, rallying more than one per cent.PHOTO: REUTERS

HONG KONG (AFP) - Asian markets mostly enjoyed more gains on Wednesday (Dec 30) following the previous day's advances, with vaccine and economic recovery optimism helping investors look past a frightening surge in virus cases around the world.

As a rollercoaster year draws to a close, two major weights on sentiment - US stimulus and the Brexit trade deal - have been navigated reasonably positively, leaving traders a little more upbeat about the next few months.

With central banks unlikely to step back anytime soon from their vast monetary easing programmes, and vaccines allowing life to get back to some semblance of normal, analysts are hopeful that equities have a long way to go higher.

"This is an economy that is recovering, policy is going to be accommodative for years to come, it suggests a good backdrop for risk assets -- it doesn't mean there aren't going to be some challenges as we progress over the next couple of years," Brian Levitt, a strategist at Invesco, told Bloomberg TV.

"The reality is the markets are going to be focused on a recovery."

Wall Street's three main indexes dipped from Monday's records on disappointment that Republicans had blocked a move to ramp up stimulus cash handouts, though there is a feeling US lawmakers will eventually push ahead with more support measures as Joe Biden takes over at the White House.

Hong Kong led gains in Asia, rallying more than one per cent, while Shanghai, Seoul, Singapore, Taipei and Jakarta also rose. However, Tokyo eased after piling on more than two per cent Tuesday, while Wellington was also in the red.

Sydney shed almost one per cent as investor confidence is jolted by fears over a spike in infections in the city.

The clusters come as a mutated strain of the disease, which spreads more quickly but is no more deadly, has been detected in several countries, putting pressure on governments to impose stricter containment measures.

Biden's Virus Warning

And Biden warned that the dire situation may not ease up until "well into March".

"The next few weeks and months are going to be very tough - a very tough period for our nation, maybe the toughest during this entire pandemic," he added.

Traders are keeping tabs on Capitol Hill after Donald Trump on Sunday finally signed off on a US$900 billion rescue package, which will see hard-up Americans receive up to US$600 handouts to help them through the crisis.

There are hopes his demand for that to be hiked to US$2,000 could come to fruition after the Democrat-run House passed a top-up bill, but Republican Senate Majority Leader Mitch McConnell blocked the measure, refusing to allow a vote.

The president hit out at his party's refusal to provide more cash, tweeting: "Unless Republicans have a death wish, and it is also the right thing to do, they must approve the US$2,000 payments ASAP. US$600 IS NOT ENOUGH!"

Axi analyst Stephen Innes said investors were not expecting anything positive on that front before the end of the year.

"Champagne corks are readying to pop after a hugely and highly unexpected profitable year for many investors. But it would have been nicer to see a US$2,000 check in the mailboxes for those that needed it the most," he said in a commentary.

But he added: "While larger stimulus paychecks would always be a welcome addition to the first-quarter consumption bonanza, the current stimulus level as it sits will drive US growth sufficiently higher, bridging the gap when people get vaccinated and return to those activities most impacted by Covid-19 such as dining out, travelling and other personal service-related areas."