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Stocks up as vaccine shields against second-wave worries

Published 11/11/2020, 01:26 pm
Updated 11/11/2020, 01:30 pm
© Reuters
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* Indexes steady but rotation to beaten-down sectors deepens

* Airline buying moderates; currency markets steady ahead of ECB

* Kiwi touches 19-month high after RBNZ meeting

* Asian stock markets: https://tmsnrt.rs/2zpUAr4

By Tom Westbrook and Lawrence Delevingne

SYDNEY/BOSTON, Nov 11 (Reuters) - Stock markets gained on Wednesday, as news of a working COVID-19 vaccine seemed to inoculate investors against worry about surging infections in Europe and the United States, while the kiwi rose as traders thought the central bank sounded upbeat.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.4% and Japan's Nikkei .N225 rose 1%, although most of the action was switching between sectors within markets, as investors shift from coronavirus winners into some of the hardest hit sectors.

Banks, for example, made modest additions to Tuesday gains, as did energy and some travel stocks while tech companies fell. Oil futures sat by two-month highs on anticipation of better demand in a post-pandemic world. O/R

Currency markets were mostly steady save for the kiwi, which climbed half a percent to a 19-month high after the Reserve Bank of New Zealand kept rates on hold, as expected, but sounded less dovish than forecast about the outlook. majors and fixed income markets were mostly flat with traders unwilling to extend a selloff in the haven assets of bonds and the yen while a trying northern winter looms. FRX/

S&P 500 futures ESc1 wobbled either side of flat and Nasdaq 100 futures NQc1 rose 0.4% after another session of Wall Street selling of hitherto soaring big tech firms. .N

"A rotation theme remains evident in equity markets," said National Australia Bank strategist Rodrigo Catril in a note.

"Big tech, which has benefited from our virus-driven change in behaviour, is now falling out of favour while small-cap stocks and those that have been most affected by social distancing restrictions have outperformed."

Amazon.com Inc AMZN.O was also under pressure overnight after European authorities filed an antitrust suit against the online retailing giant. It has suffered its sharpest two-day drop since March, shedding 8%, though has gained 64% this year. Hong Kong on Wednesday the Hang Seng .HSI traded just below flat as gains in financials were outweighed by losses in tech names such as Tencent 0700.HK and Alibaba (NYSE:BABA) 9988.HK . .HK

In Tokyo, industrials led the charge as enthusiasm for buying airlines petered out. .T

In Australia banks .AXFJ made small gains while camping gear retailers, buy-now-pay-later darling Afterpay APT.AX and Dominos Pizza DMP.AX extended losses. .AX

INOCULATE, ROTATE

The moves mirror a Wall Street rotation since Pfizer Inc (NYSE:PFE) PFE.N announced on Monday that its COVID-19 vaccine candidate, developed with German partner BioNTech BNTX.O , showed a 90% success rate in preventing infection during trials. blue-chip Dow Jones .DJI , buoyed by industrial shares, is up nearly 4% this week, while the tech-heavy Nasdaq .IXIC has lost almost that much and the S&P 500 .SPX is up 1%.

That came with a big selloff in U.S. Treasuries and the Japanese yen, even while COVID-19 deaths have crossed 300,000 in Europe and keep rising in spite of a second series of social restrictions as the northern autumn turns to winter. rate of change that we've seen in the U.S. bond market over the last few days is just not sustainable," said Chris Weston, head of research at broker Pepperstone, who is looking for more easing from the U.S. Federal Reserve next month.

"Given the shaky patch that we know we've got to navigate through, which is going to be a very dark winter in the U.S...I just can't see a situation where the Fed don't do something to keep nominal bond yields in check."

Investors are also looking to hear from European Central Bank president Christine Lagarde about the European economic outlook and stimulus prospects in a speech at 1300 GMT.

The U.S. bond market is shut for Veterans Day but the yield on benchmark 10-year Treasuries US10YT=RR posted its highest close since March on Tuesday at 0.9720%. US/

Brent crude futures LCOc1 were last 30 cents firmer at $43.90 a barrel, just below a two-month high made overnight. Gold XAU= was steady at $1,879.36 an ounce. GOL/

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