Markets Aug 21

Markets ride vaccine hopes, Wall Street tech rally

Positive news from pharmaceutical companies seeking to develop a Covid-19 vaccine buoys hopes for a return toward more normal life next year

Markets ride vaccine hopes, Wall Street tech rally
Health workers test people for the coronavirus in Indonesia. File photo by AFP.

(ATF) Asian markets are trading higher this morning after vaccine makers said they were on track for regulatory reviews in October and following a tech rally which boosted the Nasdaq to another record high.

Hopes of trade talks between the world’s two biggest economies were lifted after China’s Ministry of Commerce spokesman said both parties have agreed to hold a call in the near future in response to a question at a press conference in Beijing on Thursday.

Safe havens were shunned in a risk-on environment, with gold prices easing to $1,945 per ounce and 10-year US Treasuries yielding one basis point higher at 0.66%. The US dollar remained under pressure declining to 92.71 against a basket of currencies.

Pfizer Inc and BioNTech said in a joint statement their coronavirus inoculation is on track for regulatory review as early as October.

“Assuming clinical success, Pfizer and BioNTech are on track to seek regulatory review of BNT162b2 as early as October 2020 and, if regulatory authorisation or approval is obtained, currently plan to supply up to 100 million doses worldwide by the end of 2020 and approximately 1.3 billion doses by the end of 2021,” they said in a statement.

Both stock prices rose by over 1%. On Wall Street, the Dow Jones Industrial Average rose 0.17%, the S&P 500 rose 0.32%, and the Nasdaq Composite gained 1.06%.

“The pandemic – given the proliferation of vaccines under phase-3 trials, and the apparently good progress being made by some of these, it does not seem unreasonable to look forward to 2021 with a sense of, if not business as usual, at least, 'normal-lite' resumption, and that could also be a cause for more medium-term optimism,” said Robert Carnell, ING Bank’s regional head of research in the Asia-Pacific.

Japan rising

Japan’s manufacturing PMI edged up from 45.2 in July to a six-month high of 46.6.

“There was a stronger rebound in 'output', which now points to industrial production falling by around 5% y/y compared to the 25% y/y plunge in June,” said Marcel Thieliant, senior Japan economist at Capital Economics.

“There was also a rise in new orders, from 40.6 to 43.4. And the pick-up in 'quantity of purchases' to 42.2 suggests that the recent weakness in imports won’t last much longer.”

Japan’s Nikkei 225 rose 0.32%, mainland China’s CSI 300 added 0.75% and Hong Kong’s Hang Seng benchmark rose 0.74. But Australia’s S&P ASX 200 underperformed, slipping 0.23% as banks and miners retreated.

Credit markets are opening firm with the Asia IG index moving in one basis point to 64/65. Investors await the next wave of primary market offerings after a host of bonds priced overnight. China Golden Wheel Tiandi repurchased partially its bonds due in 2021 as asset liability management exercises gain traction. 

Huangshan Tourism has hired banks for a 5-year euro-denominated deal, and Suncorp Group has appointed banks for a long-dated AUD bond offering.

Overnight, Nanjing Jiangbei priced short-dated dollar bondsChina Jianyin sold a two-tranche deal in a $900-million raisingHK Electric priced a 10-year $500-million bond issue and Nan Fung got orders of $2 billion for a 10-year dollar bond offering.