• World

Markets rally on hopes for vaccine; EU grinds out stimulus deal

• Agence France-Presse
• July 21, 2020 9:42 AM

Hong Kong, China | Hopes for a virus vaccine helped push Asian equities higher Tuesday after promising results from two clinical trials, while traders were also cheered by news that EU leaders have finally hammered out a stimulus package for the bloc.

The studies provided a much-needed shot in the arm for investors, who have been put on edge in recent weeks by worrying spikes in new infections around the world, causing a months-long surge across equities to stumble.

The new cases have forced authorities to reimpose containment measures, fanning concerns about an economic recovery that has been supported by trillions of dollars in government and central bank stimulus.

But two studies published in The Lancet medical journal provided some much-needed cheer, with a trial among more than 1,000 adults in Britain finding a candidate vaccine induced "strong antibody and T cell immune responses" against COVID-19. 

That came as another trial of more than 500 people in China showed most had developed a widespread antibody immune response. 

Meanwhile, British biotech firm Synairgen said a randomised trial of an aerosol-based treatment shows it could drastically reduce the number of new patients dying of the disease or requiring intensive care.

The positive news from the trials could be a major step towards the Holy Grail that analysts say will likely send markets soaring.

More than 20 candidate vaccines are currently being tested on humans.

Hong Kong climbed 1.8 percent with support also coming from news that online payments giant Ant Group, an affiliate of Chinese e-commerce leader Alibaba, had moved toward a dual listing in the city and in Shanghai, in what could be among the biggest IPOs in years.

Shanghai closed up marginally after rallying more than three percent on Monday.

Sydney jumped more than two percent after Australia's government said it would extend its own record stimulus programme, with supplements to the unemployed and businesses struggling to retain staff continuing until at least the end of the year and likely beyond.

Tokyo rose 0.7 percent, while Mumbai, Seoul, Taipei, Jakarta and Wellington all jumped more than one percent. Singapore and Bangkok were also up, though Manila dipped.

- Eyes on Washington -

The advance followed another record high for the Nasdaq, which was fuelled by tech giants that have been big winners from the COVID-19 upheaval as more Americans work from home. The S&P 500 moved back into positive territory for the year.

The European Union finally reached a stimulus deal after four days of haggling, made possible by the backing of Germany and France and including the biggest ever joint borrowing by the 27 members, something that had been resisted by Berlin for generations.

"Deal!" tweeted EU Council Chief Charles Michel, whose job was to guide the talks over more than 90 hours.

The package will send tens of billions of euros to countries hardest hit by the virus, most notably heavily indebted Spain and Italy that had lobbied hard for a major gesture from their EU partners. 

In early trade, Frankfurt jumped more than one percent and Paris gained 0.7 percent, while London put on 0.6 percent.

However, the euro pared earlier gains against the dollar, with analysts saying and agreement had been widely expected.

Focus now turns to lawmakers in Washington who are looking to pass a new massive stimulus package, with the previous multi-trillion-dollar one set to expire at the end of the month.

"While the unrelenting optimistic news flow on COVID-19 treatments and cures will continue to pique investor interest, markets are counting on (stimulus) and fiscal accommodation to buttress against the deteriorating data backdrop and economic disarticulation until the vaccine deal is sealed," said Stephen Innes, of AxiCorp.

But he warned: "With so much optimism built around a medical breakthrough, either COVID-19 will be treatable and vaccinated out of existence soon, or this stock market could be in a world of hurt."

- Key figures around 0720 GMT -

Tokyo - Nikkei 225: UP 0.7 percent at 22,884.22 (close)

Hong Kong - Hang Seng: UP 1.8 percent at 25,497.72

Shanghai - Composite: UP 0.2 percent at 3,320.89 (close)

London - FTSE 100: UP 0.6 percent at 5,296.70

Euro/dollar: DOWN at $1.1443 from $1.1444 at 2030 GMT

Dollar/yen: DOWN at 107.32 yen from 107.30 yen

Pound/dollar: UP at $1.2688 from $1.2655

Euro/pound: DOWN at 90.21 pence from 90.42 pence

West Texas Intermediate: UP 0.3 percent at $40.92 per barrel

Brent North Sea crude: UP 0.4 percent at $43.45 per barrel

New York - Dow: UP less than 0.1 percent at 26,680.87 (close)

© Agence France-Presse