Asia’s major markets reacted positively on Thursday to more upbeat news from big pharma chiefs about the likely impact of the Omicron coronavirus variant.
Traders across the region followed another strong lead from Wall Street with investors now optimistic about the outlook in the run-up to Christmas.
After a rollercoaster ride since Omicron first emerged last month, drugmakers BioNTech and Pfizer said a third shot of their vaccine is effective at guarding against the new strain.
“Comments from pharmaceutical heavyweights that boosters were the answer kept the omicron-is-mild trade alive,” Jeffrey Halley, senior market analyst with OANDA, said.
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In Hong Kong, the Hang Seng Index was up over 1% at the close, though Tokyo’s Nikkei 225 was down.
Patrick J O’Hare at Briefing.com said the emerging information about the variant was likely to turn the market’s focus back to the shift in monetary policy by the US Federal Reserve.
“After all, if Omicron isn’t going to be the pernicious force some first thought it could be, then economic activity should continue to run at a pretty healthy recovery pace that makes it clear the Fed’s policy rate should not be hanging out much longer at the zero bound,” he said.
Ahead of a Fed policy meeting next week, investors will be focused on Friday’s US consumer price index data as the central bank has signalled its concern about rising inflation, which could lead to multiple rate hikes next year.
China Inflation Hits Year-High
The Hang Seng Index was up 1.08%, or 257.99 points, to 24,254.86. The benchmark Nikkei 225 index dipped 0.47% or 135.15 points to end at 28,725.47, while the broader Topix index lost 0.57% or 11.45 points to 1,990.79.
Jakarta, Singapore and Seoul were also marginally up, while Wellington was slightly down. Manila was up by more than 1%. Markets were also up in Europe at the open.
In mainland China – which reported its highest level of consumer inflation in over a year for November – Shanghai and Shenzhen finished up. The Shanghai Composite Index was up 0.98%, or 35.47 points, to 3,673.04, while the Shenzhen Composite Index on China’s second exchange gained by 0.87%, or 21.87 points, to 2,543.16.
The consumer price index, a key gauge of retail inflation, came in at 2.3% on-year, while the producer price index, which measures the cost of goods at the factory gate, edged down to a still-high 12.9%.
China Evergrande Crisis Deepens
“This doesn’t bode well for the next few months given how PPI tends to front run the CPI numbers, not only in China, but all around the world,” Michael Hewson, chief market analyst at CMC Markets UK, said.
“More worrying, food prices also came in higher with vegetable prices rising 30.6%, a trend that appears to be being repeated globally.”
The ongoing debt crisis in China’s property sector – and in particular at China Evergrande – did not appear to be denting confidence. Evergrande’s Hong Kong-listed stocks were up 4.62% in Thursday trade.
“A few months ago, Evergrande’s failure to make bond repayments spooked global markets and led to speculation of a potential crisis in China’s property and financial system,” Russ Mould, investment director at AJ Bell, said.
“Now it seems as if markets have just accepted that Evergrande could collapse and there is no panic.”
Key figures around 0810 GMT
Tokyo > Nikkei 225: DOWN 0.47% at 28,725.47 (close)
Hong Kong > Hang Seng Index: UP 1.08% at 24,254.86 (close)
Shanghai > Composite: UP 0.98% at 3,673.04 (close)
New York > Dow: UP 0.1% at 35,754.75 (close)
London > FTSE 100: UP 0.3% at 7,360.56
- AFP with additional editing by Sean O’Meara
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