GLOBAL MARKETS-Vaccine news prompts Asian share rally but signs of weakness emerge

By Scott Murdoch
HONG KONG, Nov 10 (Reuters) - Asian share markets mostly
rose on Tuesday as global investors applauded successful trial
data for a coronavirus vaccine, although expected delays to any
mass roll-out took the gloss off early gains.
European futures STXEc1 trading during the Asian session
were indicating a weaker open of at least 1.2%, while U.S.
futures showed a potential fall of at least 0.5% ESc1 after
Monday's steep market gains.
The positive tone in Asian equities came after Pfizer Inc
PFE.N said its COVID-19 vaccine, developed with German partner
BioNTech SE BNTX.O , was more than 90% effective in preventing
infection, marking the first successful results from a
large-scale clinical trial. Major Asian markets soared on the vaccine news before
weakening later in the session.
Japan's Nikkei 225 .N225 ended up nearly 0.3% after being
1.1% higher in early trading, touching a 29-year high.
Australia's S&P/ASX 200 .AXJO closed 0.66% higher after
trading up as much as 1.6%, while Hong Kong's Hang Seng index
.HSI was at 0.77% in the afternoon after rising 1% in early
trade.
Singapore's Straits Times .STI gained 2.94% to take the
index to its highest point since June.
Despite the optimistic tone across the region, there was
some weakness in China, with the CSI300 Index .CSI300 slipping
0.17%.
Analysts attributed the decline to the heavy exposure of
China's indices to tech stocks, which came under pressure as
investors eyed less consumer reliance on technology if a vaccine
leads to an easing of movement restrictions.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS was 0.1% higher.
"The market is looking forward to a more sustained solution
to the pandemic and that is why we have seen such a sharp
reaction," said Tai Hui, chief Asia market strategist at
JPMorgan Asset Management
However, he sounded caution over the speed in which the
vaccine could be implemented.
"Given more tests are needed, then the approval process.
Manufacturing and distribution would mean the vaccine, if truly
effective, is still months away from mass deployment,"
The equities optimism was not shared across all asset
classes. Oil prices slipped in Asian trade after posting the
biggest one-day percentage gain in five months.
The overnight rise prompted some traders to take profits,
analysts said.
Brazil's health regulator said on Monday it had suspended
clinical trials for China's Sinovac coronavirus vaccine after
adverse effects had emerged. ROTATION
Airline, travel and tourism stocks across Asia were
beneficiaries of the positive sentiment from the vaccine
announcement and held their gains while the broader indices
weakened in the afternoon.
"No surprises but it's essentially a rotation ... what was
bought in the last eight months is now being sold and what was
sold is being bought," Citigroup global markets director
Elizabeth Tian said.
Qantas Airways QAN.AX closed 8.3% higher to hit its
highest level since March, Japan Airlines 9201.T shot 20.6%
higher and ANA Holdings 9202.T rose 17.5%.
In Hong Kong, Cathay Pacific Airways 0293.HK shares jumped
13%, the best since July.
"Markets will get ahead of themselves in the short term with
the vaccine news but longer term it feels like it is going
higher," Ord Minnett advisor John Milroy said from Sydney.
Early Tuesday, Japan's Prime Minister Yoshihide Suga
instructed his cabinet to design a fresh stimulus package to
help revive the nation's flagging economy to offset the ongoing
effects of coronavirus. On Wall Street, the Dow Jones Industrial Average .DJI rose
2.95%, the S&P 500 .SPX gained 1.17% while the Nasdaq
Composite .IXIC dropped 1.53%. E-mini futures for the S&P 500
EScv1 rose 0.47%.
While stocks have also rallied on the assumption that
Democrat Joe Biden would be the next U.S. President, the top
Republican in U.S. Congress on Monday did not acknowledge Biden
as president-elect, raising concerns about a rough transition of
The Australian dollar AUD= fell 0.08% versus the greenback
at $0.7279.
The yen JPY= strengthened 0.38% to 104.96 per dollar,
while sterling GBP= was last trading at $1.3182, up 0.14% on
the day.
The vaccine news also sent long-dated U.S. Treasury yields
sky-rocketing in their biggest one-day jump since March. The
yield curve, an indication of risk appetite, hit its steepest
level since March. Bonds had their biggest selloff since recoiling from March
peaks. The yield on benchmark 10-year U.S. government debt
US10YT=RR , which rises when prices fall, jumped 10.3 basis
points on Monday and held above 0.9% on Tuesday at 0.9099%
The CBOE Market Volatility index .VIX , a barometer of
investor anxiety, hit its lowest closing level since late
August.
Oil prices lost momentum in Asian trade. Light crude oil
CLc1 fell by 1.49% to $39.74 a barrel while Brent crude
LCOc1 slipped 1.06%. O/R
Spot gold XAU= added 1% to $1,880.26 an ounce.

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