SYDNEY: Asian stocks hit a record high on Monday as vaccine optimism and strong economic data from China and Japan outshone worries about rising coronavirus cases lifting the tech and auto sector.
MSCI’s broadest index of Asia-Pacific shares outside Japan gained 1% to hit its highest since its launch in 1987 with markets across the region making milestone peaks. Japan’s Nikkei traded at 29-year high, South Korea’s Kospi at its highest since early 2018 and Australia’s ASX 200 hit an eight-month peak in the morning before a glitch halted trade.
S&P 500 futures rose 0.6% following the index’s record close on Friday, Nasdaq 100 futures lept 1% and European futures were up strongly with 50 futures up 0.8% and FTSE futures up half a percent. Currencies and commodity markets were a little more circumspect, but the dollar was down against trade-exposed currencies and oil prices firmed after falling on Friday.
Japanese economic growth beat records and forecasts to pull the world’s third-largest economy out of recession and better-than-expected industrial output in China added to the enthusiastic mood as did a weekend trade deal.
Over 15 Asia-Pacific economies, including China and Japan, but excluding the United States, agreed to reduce future tariffs at a time of rising protectionism elsewhere. The Regional Comprehensive Economic Partnership (RCEP) is now the world’s largest trade bloc that excludes the US and marks the first time that East Asian powers China, Japan and South Korea are in a single trade agreement.
The flow driven gains came despite plenty of reasons to worry. US President Donald is digging in for a drawn-out transition to President-elect Joe Biden. US media reported that Trump is planning a flurry of aggressive policy moves against China in the coming ten weeks of this president.
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Mainland Chinese stocks rose by the afternoon. The Shanghai composite rose nearly 1%, while the Shenzhen component was up 0.50%. The country’s factory output rose faster than expected in October jumping 6.9%. Retail sales continued to recover, climbing 4.3% year-on-year, but missing forecasts of a 4.9% growth.
Over in Australia, the Australian Securities Exchange halted stock trading shortly after the open, citing “market data issues.” The exchange said it is “working to rectify the issue as soon as possible.”
The S&P/ASX 200 had made gains in early trading, last jumping 1.23%. Indian markets are closed due to a holiday. Overall, MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.23%. Hong Kong’s Hang Seng index rose 0.41%. Casino and finance stocks listed in the city were going strong. Standard Chartered was up 3.84%, while HSBC bounced 3.22%.
Japan’s exporters made major gains in the morning on the back of the trade deal news. Autos in Japan mainly benefited, with Nissan soaring more than 5%, and Mazda rocketing by more than 6%. Mitsubishi jumped more than 3%, and Honda gained almost 5%.
Tech stocks in the country also gained. Tokyo Electron jumped 5.38%, while Panasonic soared nearly 5%. Softbank Group was up 1.45%. Tech stocks listed in South Korea also jumped. Samsung Electronics was up 4.43% and SK Hynix rocketed more than 8%.
Coronavirus cases are surging in Europe and the United States and new outbreaks have emerged in South Korea, Japan and Australia, while Brexit talks are at delicate crossroads again. A wave of state-owned enterprise defaults in China has also spooked mainland bond investors. A few of these fears kept currency market moves in check and left oil, a proxy for global growth, well below last week’s peaks as traders brace for a grim winter ahead.
