Asian Stocks Up as Economic, Vaccine Optimism Prevails By

© Reuters.

By Gina Lee – Asia Pacific stocks were mostly up Wednesday morning as a brightening economic outlook and news that vaccines can counter the virulent Delta strain of the COVID-19 virus boosted investor sentiment.

China’s edged up 0.16% by 10:40 PM ET (2:40 AM GMT) and the was up 0.39%. Data released earlier in the day said that the was a better-than-expected 50.9 for June. The was 53.5, lower than May’s reading of 55.2.

President Xi Jinping will also deliver a speech to mark the 100th anniversary of the founding of the Chinese Communist Party on Thursday.

Hong Kong’s inched up 0.01%.

Japan’s inched down 0.04%. Data released earlier in the day said  fell by a steeper-than-expected 5.9% month-on-month in May.

South Korea’s was up 0.42% and in Australia, the gained 0.57%.

U.S. shares closed at a record, with Moderna Inc. (NASDAQ:) shares hit hitting a record high after the company said that its produced protective antibodies against the virus’ Delta strain.

U.S. Treasuries steadied as investors digested the latest comments from the U.S. Federal Reserve. While Fed Bank of Richmond CEO Thomas Barkin said he wants to see much more U.S. labor market progress before slowing asset purchases, while Fed Governor Christopher Waller argued that recent economic performance warrants thinking about pulling back on some stimulus.

The rollout of COVID-19 vaccines has helped global shares recover from much of the market panic after COVID-19 was declared a pandemic in March 2020. The rally has managed to weather concerns about more virulent COVID-19 mutant strains, stretched valuations and the prospect of tighter central bank monetary policy.

“The fight against COVID-19 is far from over, but optimism abounds so much that the global economy is temporarily overheating as a consequence,” Nordea Investment Funds SA senior macro strategist Sebastien Galy said in a note.

“The environment in Q3 should still be supportive for risky assets, though fear of bouts of persistent inflation could alter this scenario. We expect to see bouts of volatility from this,” the note added.

Data released overnight in the U.S. also accentuated the optimism about the U.S. economic recovery, with June’s reading a better-than-expected 127.

The market now awaits the U.S. job report, including, for June that is due on Friday to gauge the employment market’s recovery. The data could also indicate when the Fed will begin asset tapering and hike interest rates, as hinted in its latest handed down earlier in the month.

“A stronger June employment report would help solidify expectations for a tapering announcement at one of the next few Fed meetings,” Citigroup (NYSE:) Global Markets Inc. economists Veronica Clark and Andrew Hollenhorst in a note.

Meanwhile, the Organization for Economic Co-operation and Development will meet in Paris later in the day to finalize a proposal to overhaul global minimum corporate taxation. European Central Bank President Christine Lagarde will also speak on Friday.

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