HONG KONG: Equities pushed ever higher in Asian trade on Tuesday following another record-breaking performance on Wall Street as vaccinations are rolled out, infections fall and investors bet Joe Biden will be able to push through his massive stimulus.
While there is a growing sense of concern that valuations may have gone too far for now, having enjoyed a strong rally in recent months, the general mood is one of optimism that the global economy will break out as life gradually returns to normal.
The president’s $1.9 trillion rescue bill is winding its way through Congress and while Biden might not get the broad bipartisan deal he had hoped for, Democrats’ majority in both houses is likely to be enough for them to pass a large package.
The giant spending splurge, which includes $1,400 cash handouts, comes as the US immunisation programme gathers pace and figures show new cases, deaths and hospitalisations are tumbling.
A similar picture is emerging in Britain while Europe is also seeing improvements.
Adding to the positivity, statistics out of Israel — which has led the world in vaccinations — appear to show the jabs are working.
“Financial markets are forward-looking, and it looks like the US and Europe have Covid cases heading in the right direction,” said OANDA’s Edward Moya.
“Reflation bets are running wild and that could be enough to keep this stock market party going.”
All three main indexes on Wall Street ended at new highs and Asia extended the rally.
Seoul led gains, jumping one percent while Hong Kong, Tokyo, Shanghai, Singapore, Jakarta and Manila were also well in the green.
Axi strategist Stephen Innes said buying was “further buoyed by an upbeat set of earnings from the holiday season and vaccine optimism”.
The inoculation drive, he said, “provides the ultimate recovery safety net that will allow people to participate on all those pre-Covid activities like the simple pleasures of going to a movie or having a meal out at the local eatery again”.
Crude prices continued to climb on expectations for a surge in demand as economies reopen, with Brent holding around 13-month highs above $60.
“Oil’s fundamentals are looking strong again on both (the) supply and demand side,” said Moya.
“Despite demand being down about five million barrels year-over-year, optimism is high that vaccine rollouts will have key parts of the global economy return to normal.”
Bitcoin pushed to a new record of $47,492.93 after getting a huge boost from news that Elon Musk’s electric carmaker Tesla had invested $1.5 billion in the cryptocurrency and said it would soon accept it as payment.
Gold was also seeing increasing interest from dealers seeking out the safe haven as a hedge against an expected jump in inflation with the world economy kicking back into gear and Biden’s stimulus being rolled out.
The yellow metal has risen around three percent since hitting a two-month low on Friday and was trading at $1,841 an ounce.