Asian shares boosted by vaccines hopes, Brexit deadline casts shadow

Asian shares bounced back on Friday as progress on COVID-19 vaccines boosted investor sentiment, but tricky Brexit negotiations and U.S. stimulus talks capped gains in riskier assets. MSCI’s ex-Japan Asia-Pacific index rose 0.5%, on track for its sixth straight week of gains, while Japan’s Nikkei dropped 0.6%.

Investors bet on stronger economic growth next year as more countries prepare for vaccinations. U.S. authorities voted overwhelmingly to endorse emergency use of Pfizer’s coronavirus vaccine while doses of a COVID-19 vaccine made by China’s Sinovac Biotech SVA.O are rolling off a Brazilian production line.

But buying fizzled out in some markets as talks on U.S. stimulus failed to make progress and after British Prime Minister Boris Johnson said on Thursday there was “a strong possibility” Britain and the EU would fail to strike a trade deal.

On Wall Street, the Dow Jones Industrial Average fell 0.23%, the S&P 500 lost 0.13% and the Nasdaq Composite added 0.54%. U.S. stocks were mixed as near-term U.S. fiscal stimulus appeared unlikely after Democrat House Speaker Nancy Pelosi suggested wrangling over a spending package and coronavirus aid could drag on through Christmas.

The number of Americans filing first-time claims for unemployment benefits increased more than expected last week as mounting COVID-19 infections caused more business restrictions.

In the currency market, Brexit uncertainties overshadowed trading in sterling. The British pound traded at $1.3307, flat on day but having lost 0.9% so far this week against a generally weaker dollar.

The euro held not far from 2 1/2-year highs of $1.2154 after the European Central Bank delivered a fresh stimulus package that was broadly in line with market expectations on Thursday.

The ECB increased the overall size of its Pandemic Emergency Purchase Programme (PEPP) by 500 billion euros to 1.85 trillion euros and extended the scheme by nine months to March 2022.

The yen edged up 0.2% to 104.00 while the Australian dollar extended its gains to $0.7557, its highest since June 2018.

Oil prices climbed further, with Brent hitting levels not seen since early March, as coronavirus vaccination rollouts fuelled hopes that crude demand would pick up in 2021.

Brent crude rose 0.7% to $50.61 per barrel while U.S. West Texas Intermediate (WTI) crude gained 0.9% to $47.18 a barrel.

Asian shares boosted by vaccines hopes, Brexit deadline casts shadow, Reuters, Dec 11