Asian equities start week with gains

Equities race higher on vaccines and stimulus

Friday saw another chaotic day on Wall Street, with the Nasdaq finishing higher while the S&P 500 and Dow Jones continued falling. It is all about the J&J vaccine re-energising the global recovery trade today in Asia, though, with regional markets rallying strongly.

South Korea and Taiwan are closed today, but the Nikkei 225 has leapt by 2.10%. China’s Shanghai Composite has risen 0.50%, with the CSI 300 climbing by 1.10%. The Hang Seng is 1.10% higher ahead of expected changes in its composition to be announced later today. With markets freshly vaccinated with the latest buy everything potion, they were able to shrug off a very mixed bag of China and pan-Asia manufacturing PMI’s this morning. China released official manufacturing and services PMI’s yesterday, which disappointed, as did the Manufacturing PMIs across the rest of Asia.

Singapore has rallied by 0.90%, with Kuala Lumpur flat, and Jakarta 0.70% higher. Australia’s ASX 200 has jumped 1.40%, and the All Ordinaries have risen by 1.0% as commodity prices jump in Asia today.

Although the week has started on a positive note, the recovery is far less vaccine-powered than we have seen in times past. Europe will reluctantly follow suit, but the heavy data and event risk calendar, the US stimulus bill all provide plenty of fodder for the inflation vigilantes to reappear. Today’s rally looks like a mechanical reaction to the J&J news, but markets have not shaken off the trauma and doubts of last week yet.

It is noteworthy that the US House of Representatives passed the Biden USD1.90 trillion stimulus package on Saturday by a narrow margin. The bill will now move on to a much more challenging reading in the Senate, although the minimum wage hike’s dropping should ease its passage before the March 14th deadline expiry of the previous stimulus measures.

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