Vaccine focus drives Asian stocks to record highs

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SYDNEY – Asian equities hit a record high on Monday as investors set aside fears about rising coronavirus cases and bought stocks, cheered by data showing a robust recovery in China and Japan.

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MSCI's broadest index of Asia-Pacific shares outside Japan gained 1.1% to hit its highest since its launch in 1987, with markets across the region making milestone peaks.

Japan's Nikkei rose 2% to a 29-year high. South Korea's Kospi hit its highest since early 2018 and Australia's ASX 200 hit an eight-month top, before jamming there when a glitch halted trade.

S&P 500 futures rose 0.9%, Nasdaq 100 futures leapt 1% and European futures were up strongly with EuroSTOXX 50 futures up 0.9% and FTSE futures up 0.6% late in the Asia session.

“There’s just mountains of cash sitting on the sidelines, waiting to be put to work,” said Kyle Rodda, analyst at IG Markets in Melbourne.

“And since we’ve got this vaccine news, as well as diminished risk around the U.S. elections, all of this is flying into equities … everyone’s thinking now that it’s the cue to get in.”

Currency, bond and commodity markets were a little more circumspect, but the dollar slipped against trade-exposed currencies and oil bounced off Friday’s lows.

Japanese economic growth, which beat records and forecasts to pull the world’s third-largest economy out of recession and better-than-expected industrial output in China added to the enthusiastic mood.

“Rising COVID-19 cases are a risk, but keep the faith,” Morgan Stanley strategists said in their 2021 outlook note.

“We think this global recovery is sustainable, synchronous and supported by policy, following much of the ‘normal’ post-recession playbook. Overweight equities and credit against cash and government bonds, and sell dollars.”

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