By Gina Lee
Investing.com – Asia Pacific stocks were mostly up on Wednesday morning, taking their cues from U.S. shares. The Dow Jones Industrial Average rose above 30,000 for the first time during the previous session as optimism over a possible COVID-19 vaccine and clarity over the U.S. presidential transition boosted risk appetite.
Japan’s Nikkei 225 jumped 1.60% by 10:29 PM ET (2:29 AM GMT). South Korea’s KOSPI was up 0.55%, with the Bank of Korea to hand down its policy decision on Thursday.
In Australia, the ASX 200 gained 0.84%.
Hong Kong’s Hang Seng Index rose 1.51%. Chief Executive Carrie Lam is due to deliver her annual policy address later in the day, with the city facing tightened social distancing measures as it battles a fourth wave of COVID-19 cases. 80 new daily infections were recorded on Tuesday.
In China, the Shanghai Composite inched up 0.07%, while the Shenzhen Component inched down 0.46%.
Confidence that a COVID-19 vaccine will be available soon is growing, with AstraZeneca PLC (LON:AZN) reporting positive results for its candidate AZD 1222 on Monday. Offerings from Pfizer Inc (NYSE:PFE) and Moderna Inc (NASDAQ:MRNA) have also reported positive results over the past two weeks.
U.S. President-elect Joe Biden has formally begun the transition to the White House, ending almost a month of post-election uncertainty as incumbent president Donald Trump challenged the results in court. Trump’s apparent willingness to comply, despite threats to continue with the legal challenges, allowed General Services Administration head Emily Murphy to green-light the start of the formal handover process.
News that former Federal Reserve Chairman Janet Yellen could be tapped as the next Secretary of the Treasury also cheered markets. If nominated, Yellen is likely to focus on tackling growing economic inequality.
With a little over the month left until the end of 2020, the vaccine optimism has some investors hopeful that the economic recovery will happen quickly once they become available.
“Looking three to six months out, we do think the recovery will maintain its momentum … when you see that reflation trade coming back, it’s telling you that investors are gaining confidence in growth prospects looking forward,” Wells Fargo (NYSE:WFC) Securities LLC equity strategist Anna Han told Bloomberg.
However, ever-rising number of COVID-19 cases in the U.S. prompted some states to re-introduce restrictions ahead of Thursday’s Thanksgiving holiday. There are also fears that the large number of Americans expected to travel over Thanksgiving will lead to a spike in cases.
“Sentiment is running very hot as we come to the end of a cracker month for risk assets, so it does make you wonder whether the market is starting to exhibit signs of euphoria and is due for a bit of a retracement in the short-term,” IG Australia markets analyst Kyle Rodda told Reuters.
“But for all the risks the pandemic poses over the next few months...market participants appear happy to look through it all, and position for a post-pandemic world,” Rodda added.
A slew of data is due out of the U.S. ahead of the Thanksgiving holiday. The Federal Reserve will release the minutes of the most recent Federal Open Market Committee meeting later in the day, with U.S. jobless claims and GDP data also due to be released on the same day.