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Asia: Markets advance on hopes for vaccine, focus on EU summit
[HONG KONG] Hopes for a virus vaccine helped push Asian equities higher on Tuesday after promising results from two clinical trials, while traders were also keeping tabs on an EU summit aimed at hammering 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.
In early trade, Hong Kong climbed 1.8 per cent and Shanghai added 0.6 per cent after rallying more than three per cent on Monday.
Tokyo went into the break 0.6 per cent higher, while Sydney, Seoul, Taipei and Wellington all jumped more than one per cent. Singapore and Jakarta were also up.
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.
Focus is on Europe as leaders battle to reach an agreement on an US$860 billion rescue package, with expectations a deal will eventually be reached.
French President Emmanuel Macron and German Chancellor Angela Merkel have expressed cautious optimism for a breakthrough and the euro was holding gains against the dollar.
Lawmakers in Washington 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.
Australia said it would extend its own record stimulus, with supplements to the unemployed and businesses struggling to retain staff continuing until at least the end of the year and likely beyond.
"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."