Asia’s major markets bounced back on Wednesday as traders responded to less pessimistic views on current vaccines’ effectiveness against the new Omicron variant.
A mild recovery from the previous two days’ steep losses was turned on its head in the region on Tuesday after Moderna head Stephane Bancel told the Financial Times that existing vaccines might not be as effective against the new coronavirus strain, owing to its multitude of mutations.
But Asian markets mostly rose and oil prices advanced after other top drug makers offered differing opinions on their vaccines’ efficacy and the Fed took a hawkish pivot on monetary policy.
The boss of BioNTech, which made a shot with Pfizer, said it was likely people would be protected against severe symptoms.
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The less alarming outlook helped settle nerves slightly while news that Moderna, Pfizer and the backers of Russian vaccine Sputnik V are already working on an Omicron-specific vaccine also provided some solace.
With medical experts saying Omicron was still being assessed, analysts said markets would remain volatile.
“If by this time next week the medical gurus have concluded that existing vaccines are ‘sufficient’ and/or the Omicron virulence is milder than the current Delta variant, the market should bounce strongly,” strategist Louis Navellier said.
Tokyo and Hong Kong, which both went south soon after the Bancel comments were released, saw much-needed gains.
The benchmark Nikkei 225 index advanced 0.41%, or 113.86 points, to end at 27,935.62, while the broader Topix index gained 0.44%, or 8.39 points, to 1,936.74.
Crude Contracts Advance
The Hang Seng Index climbed 0.78%, or 183.66 points, to 23,658.92. The Shanghai Composite Index added 0.36%, or 13.00 points to 3,576.89, while the Shenzhen Composite Index on China’s second exchange rose 0.19%, or 4.88 points, to 2,524.14.
Shanghai, Singapore, Seoul, Wellington, Mumbai, Bangkok and Taipei also rose, and investors took heart from data showing factory activity across the region expanding last month.
Sydney, which closed before the interview was published Tuesday, slipped slightly – though losses were pared by data showing Australia’s economy shrank less than feared in the third quarter.
Manila and Jakarta sank, though US futures rose while London, Paris and Frankfurt opened higher.
Crude, which was pummelled Friday and again Tuesday on fears about possible new lockdowns and their impact on demand, also enjoyed some advances with both main contracts up around 4%.
Fed Tapering Flagged
The broadly positive performance across Asia came after US Federal Reserve boss Jerome Powell put the central bank on the path to removing its vast financial support measures at a quicker pace than first flagged, and lifting interest rates next year.
With prices surging at the fastest pace in three decades, Powell told lawmakers that “clearly the risk of more persistent inflation has risen.”
With the bond-buying programme put in place at the start of the pandemic likely to end sooner, analysts are now suggesting the bank could lift rates possibly twice by the end of 2022.
“In all likelihood the Fed will now ramp up their pace of tapering and possibly complete it by March, which leaves the potential for a rate hike to finally fend off inflation,” Matt Simpson at StoneX Financial said.
Tokyo > Nikkei 225: UP 0.4% at 27,935.62 (close)
Hong Kong > Hang Seng Index: UP 0.8% at 23,658.92 (close)
Shanghai > Composite: UP 0.4% at 3,576.89 (close)
New York > Dow: DOWN 1.9% at 34,483.72 (close)
- AF with additional editing by Sean O’Meara