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Investors jittery amid pandemic put doubts

(ATF) Hong Kong: Asian markets remained on edge despite the progress on the vaccine front amid uncertainty around the US economic stimulus and US President elect Joe Biden’s position that he won’t soon remove tariffs on Chinese goods. 

Markets were largely flat as investors grappled with these conflicting sentiment drivers.

Japan’s Nikkei 225 index added 0.05%, Australia’s S&P ASX 200 inched down 0.03% and Hong Kong’s Hang Seng index dipped 0.13%. Regionally, the MSCI Asia Pacific index advanced 0.11%.

DBS Bank economists said the rift between the US Federal Reserve and the Treasury was evident from their divergent assessments on the economy and policies for 2021 to the Senate Banking Committee. 

“A stronger US stimulus is still dependent on the Democrats winning the US Senate runoff in Georgia on 5 January. Before that, US government shutdown worries loom as the funding for almost all federal agencies are set to expire on 11 December,” they said in a note.

“The above US monetary and fiscal policy divides have questioned the ‘pandemic put’ that supported risk appetite this year. Unlike the start of the outbreak, the assumption is no longer as strong that populist fiscal spending and expansive monetary policies would keep getting expanded and extended to insulate economies from self-induced recessions and new waves of infections.”

Safe havens gained on the back of the uncertainty as US Treasuries rebounded with the 10-year yield falling 2 basis points to 0.92% and jumping 0.6% to $1,823 per ounce.

Yuan retreats  

The offshore yuan retreated weakening 0.1% to 6.56 per dollar on worries about elevated US-China tensions. 

But there was cause for optimism as United Kingdom became the first country in the world to approve the Pfizer-BioNTech Covid-19 vaccine for use.

“The first doses are expected to arrive in the UK in the coming days, with complete delivery fulfilment expected in 2021,” the two companies said in a joint statement.

Fawad Razaqzada, a market analyst at TF Global Markets, said the reaction to the news was somewhat muted as the markets have already been pricing in an improved health outlook throughout November. But there was cause for optimism.

“Critics will argue about vaccine’s safety and many people will be probably think twice before taking the shot. But ultimately, a vaccine is our best hope to live in a Covid world, so I think a lot of people will slowly take the shot and life could return to normalcy by the middle of 2021,” he said.

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Asia Stocks

· Japan’s Nikkei 225 index added 0.05%

· Australia’s S&P ASX 200 inched down 0.03% 

· Hong Kong’s Hang Seng index dipped 0.13%

· China’s CSI300 ended flat

· The MSCI Asia Pacific index advanced 0.11%.

Stock of the day

Xiaomi Corp shares fell as much as 11.7% after the company issued fresh equity shares at a discount that would raise its equity by 4%. The discount was 9.9% to the average price of the last five trading days.  

Umesh Desai

Umesh Desai is the Executive Editor at Asia Financial. Prior to this he spent over two decades with Reuters News as Asia Pacific Chief Correspondent in Hong Kong and Bureau Chief in Bombay. Before becoming a journalist Umesh was a credit ratings analyst with Moody's arm in India - ICRA. A chartered accountant by training, Umesh began his career as an equity analyst. His Twitter handle is @umesh_desai


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