Market Close Aug 12

Vaccine hopes lift markets from stimulus linked lows

Gold off lows but remains under pressure; US Treasuries tumble and dollar recovers; Hang Seng outperforms as HSBC, Hang Seng surge

Vaccine hopes lift markets from stimulus linked lows
People walk past street vendors in Chinatown in New York City on August 10, 2020. This was one of the first neighbourhoods in Manhattan to suffer financially during the lockdown from Covid-19, but has been seeing more people on the streets and now has dozens of restaurants serving diners at outdoor seating nightly. Photo: Spencer Platt /Getty via AFP.

(ATF) Hong Kong: Investors looked past the deadlocked US debate on stimulus measures as markets focused on vaccine development as a route to helping economies rebound and growth to resume.

Russia claims it has developed the world’s first vaccine offering “sustainable immunity” against the coronavirus.

Six other vaccines that are being developed separately in the US, Europe and Asia are in the third and final phase of efficacy trials and three more are likely to enter this final phase of development over the next month or so, Capital Economics said in a note.

“The speed of development has been remarkable. Until now, the fastest time to develop a vaccine against a novel virus had been four years. It now seems that one will be developed within 12 months. This could transform the battle against Covid-19,” said Neil Shearing, group chief economist at Capital Economics.

In Asia, the Nikkei 225 added 0.41%, Hong Kong’s Hang Seng index surged 1.42% as index heavyweights HSBC and Hang Seng Bank rose, and Australia’s S&P ASX 200 dipped 0.11% but was off earlier lows.

China’s CSI 300 underperformed the region with the benchmark down 0.73% as the tech war with the US intensifies.

A US executive order banning China's TikTok could prevent American app stores from offering the popular short-video app and make advertising on the platform illegal, documents have showed.

Gold, meanwhile, recovered from its lows after it registered its biggest fall in seven years. It is still trading below $2,000 at $1,935 per ounce. And US Treasury yields gapped, with the 10-year yield rising 3 basis points to 0.675%.

This is giving a boost to the US dollar, which has risen against a basket of currencies to 93.51.

Political blame game, US markets down

Overnight, US Senate Majority Leader Mitch McConnell blamed the Democrats for the stimulus stalemate.

“The Speaker and the Democratic Leader say they won’t allow another cent for families, schools, or the PPP unless they get a trillion-dollar state government slush fund, way beyond Covid needs,” he said in a tweet. “These unrelated liberal demands are blocking billions in aid that families need now.”

Analysts are turning bearish on the recovery in the world’s largest economy as the re-openings could have come too soon amid a second wave of infections.

“The rising Covid-19 infections and deaths convinced several states to pause, or backtrack on, plans to re-open their economies,” Joel Prakken, IHS Markit's chief US economist, said.

“We also expect rising infections to encourage new caution by consumers and business independent of official measures to contain the virus, even as federal fiscal support wanes and state and local governments tighten budgets. Consequently, we revised down our forecast for growth in 2021 from 3.7% to 3.1%.”

Asian credit markets are trading weaker but primary markets remain busy with investors hunting for yields. China Great Wall AMC issued a bond mandateMTR Corporations set a green bond price guidanceChina Great Wall also announced an initial price guidance, while Axiata Group unveiled price guidance for a two-trancher, and Yunda Holdings came into the market with a bond guidance.

Also on Asia Times Financial

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PetroChina nabs three Venezuela oil tankers 

Electric carmakers seek blank-check firms for funding

Foreign Exchange:.

Asia Stocks

# Japan’s Nikkei 225 index added 0.41%

# Australia’s S&P ASX 200 dipped 0.11% 

# Hong Kong’s Hang Seng index dropped 1.42%

# China’s CSI300 slid 0.73%

# The MSCI Asia Pacific index advanced 0.59%.

Stock of the day

HSBC rose as much as 5.4% as the stock continued to rise from its all-time lows. It is an index heavyweight and along with its subsidiary Hang Seng Bank’s gains helped boost the Hong Kong benchmark.