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GLOBAL MARKETS-Asia shares rally on vaccine hopes, oil retreats after early gains

Published 19/05/2020, 04:26 pm
© Reuters.
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* Asian stock markets: https://tmsnrt.rs/2zpUAr4

* MSCI ex-Japan jumps to highest since May 1

* Euro hovers near 2-week highs, yen weakens against dollar

* Coronavirus vaccine trial success sparks rally

* Oil retreats from 2-month high

By Swati Pandey and Sumeet Chatterjee

SYDNEY/HONG KONG, May 19 (Reuters) - Asian shares extended gains on Tuesday as more countries emerged from their economic lockdowns and a successful early-stage trial of a coronavirus vaccine cheered sentiment, although oil shed some of its early moves higher.

The rally followed a firmer Wall Street lead after data from Moderna Inc's MRNA.O COVID-19 vaccine, the first to be tested in the United States, showed it produced protective antibodies in a small group of healthy volunteers. positive early test results boosted sentiment as investors wagered on a faster-than-expected economic recovery.

Many economies could post strong activity data from May as a result of easing restrictions, but the initial burst may give market participants a false sense of a return to normal, CBA said in a research note.

"We also expect economic recoveries to be uneven," it said in its global markets research note. "An economy would still be in a very deep recession even if economic activity is able to quickly return to 95% of 'normal' levels."

S&P 500 futures ESc1 fell 0.03%, while European markets were set to open higher with the pan-region Euro Stoxx 50 futures STXEc1 up 0.24% and German DAX futures FDXc1 trading 0.29% higher.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was up 1.8% to two-week highs, after U.S. stocks ended the previous session with gains. The index is, however, down 1.9% so far this month.

Australia's benchmark index .AXJO and Hong Kong's Hang Sang .HSI were the lead gainers, up 2% each, South Korea .KS11 added 2.3% while China's blue-chip index .CSI300 climbed 0.8%.

Japan's Nikkei .N225 added nearly 2% to the highest since early March.

On Wall Street overnight, the benchmark S&P 500 .SPX posted its biggest one-day percentage gain in almost six weeks, gaining 3.15%. The Dow Jones Industrial Average .DJI rose 3.85% and the Nasdaq Composite .IXIC added 2.44%.

However, analysts, for now, expect a steep contraction in world growth with the outlook for 2021 still uncertain with no approved treatments or vaccines for COVID-19 currently. Experts predict a safe and effective vaccine could take 12 to 18 months.

"It may be the case that central bank liquidity is chloroforming markets to overlook risks such as overleveraged corporate and government balance sheets, growing COVID-19 case numbers, growth holes and a slow recovery path," analysts at Perpetual wrote in a note.

The vaccine optimism sent treasury yields surging overnight as investors dumped bonds, while gold XAU= came off its peak. Spot gold was traded at $1,735.8486 per ounce. GOL/

Oil prices were mixed on Tuesday, with profit-taking paring Brent's early gains, while U.S. crude extended its rally amid signs producers are cutting output as promised just as demand picks up. crude LCOc1 fell 19 cents, or 0.6%, to $34.62 a barrel, after earlier touching its highest since April 9.

There was some good news in Europe, after France and Germany called for the creation of a 500 billion euro ($543 billion) Recovery Fund able to offer grants to the countries and regions hardest hit by the coronavirus crisis.

The euro EUR=D3 hovered near a two-week top at $1.0907. The British pound GBP=D3 was up 0.1% at $1.2201. The risk-sensitive Australian and New Zealand dollars also rose slightly.

The safe-haven yen JPY= eased on the greenback to 107.38 per dollar.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Tracking the spread of the novel coronavirus

https://graphics.reuters.com/CHINA-HEALTH-MAP/0100B59S39E/index.html

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