Wed, 20 Jan 2021

Markets mixed as early rally loses momentum

News24
25 Nov 2020, 19:12 GMT+10

Asian markets were mixed Wednesday as an early rally fizzled out on profit-taking and lingering worries about the impact of a spike in coronavirus infections around the world.

Regional investors rushed out of the blocks in the morning following a blockbuster performance on Wall Street, as vaccine successes and easing US political uncertainty boosted investor confidence in the economic recovery.

Signs that infection rates in Europe are slowing enough to allow some countries to ease lockdown measures added to the sense of hope across trading floors.

However, excitement was tempered by a still-high number of new cases and deaths, as well as a pick-up in several Asian nations that are causing governments to reimpose containment measures.

Hopes for a worldwide rollout of a vaccine were given an extra lift Tuesday when Russia said its Sputnik V drug had shown to be 95 percent effective, making it the fourth that could be available soon after similar positive announcements from Pfizer/BioNTech, Moderna and AstraZeneca.

The breakthroughs come as political uncertainty appears to be waning in Washington after government officials began the crucial transition process paving the way for Joe Biden to enter the White House.

While he still denies losing the November 3 election, Donald Trump's decision to sign off on the move by the General Services Administration was effectively an admission of defeat.

Fed's 'big event risk'

Investors were also upbeat about Biden's cabinet picks so far, particularly former Federal Reserve boss Janet Yellen's nomination as treasury secretary, with optimism she can work well with current central bank head Jerome Powell.

Wall Street's three main indexes ended more than one percent higher Tuesday, with the Dow closing above 30 000 for the first time and the S&P 500 also notching up a record.

The rally initially carried on in Asia, but traders lost momentum as the day wore on.

Tokyo, Hong Kong, Sydney, Wellington and Bangkok rose but Shanghai, Singapore, Seoul, Taipei, Manila, Jakarta and Mumbai were all in the red.

London, Paris and Frankfurt started with small gains.

Ilya Spivak, strategist at DailyFX, said attention was now on the release later in the day of minutes from the Federal Reserve's most recent policy meeting earlier this month, describing it as "a big event risk".

"Markets don't seem keen on follow-through. The worry is that the Fed will continue to signal that they're keeping to a hands-off posture. No tightening, but no new easing either," he added.

Some high-yielding currencies that had surged in the morning also gave up their gains, though expectations of a rise in demand continued to support oil prices, which have jumped around a quarter over the past month and are now sitting at levels not seen since March.

Source: News24

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