Asia report: Shares higher on post Covid recovery hopes
By Frank Prenesti
Date: Tuesday 26 May 2020
(Sharecast News) - Asian shares closed higher on Tuesday, ignoring the threat of more political instability on Hong Kong as investors eyed the first human trials of a coronavirus vaccine by pharma firm Novavax.
Japan's Nikkei closed 2.55% higher at 21,277 points to hit levels not seen since early March as Prime Minister Shinzo Abe lifted the country's state of emergency.
Australia's S&P/ASX 200 powered ahead by nearly 3% to 5,780.00. South Korea's Kospi gained 1.7% to 2,027.77, Hong Kong's Hang Seng rose 2.1% to 23,438.25 and the Shanghai Composite was up 0.8% to 2,840.43.
US-based biotechnology company Novavax said it had started enrolling participants in Australia for a clinical trial of its coronavirus vaccine candidate, NVX-CoV2373 with preliminary immunogenicity and safety results from the Phase 1 portion of the trial expected in July.
"As is the financial market's want these days though, even the slimmest of positive news on the COVID-19 front trigger a bullish immune response and another wave of the peak-virus trade," said Oanda analyst Jeffrey Halley.
However, despite the bullish mood, the spectre of more geopolitical worries for trade loomed large after
China warned on Monday that it will take counter-measures if the US insisted on undermining its interests over Hong Kong, fuelling fears of a continued standoff between the world's largest economies.
The US has threatened more trade sanctions in response to China's plan to impose a new security law on Hong Kong as it looks to bring the territory to heel.
In regional economic news, Singapore downgraded its 2020 gross domestic product forecast for the third time as it prepared for recession.
The city-state lowered its GDP forecast to a contraction range of -7% to -4% from the prior range of -1% to -4%. The economy shrank by a less-than-expected 0.7% year-on-year in the first quarter and 4.7% quarter-on-quarter.
Australian stocks reached their highest level in more than two months, as hopes of economic recovery and a strong performance from the financial sector buoyed sentiment.
The ASX200 has gained more than 100 points two days in a row this week and was now less than 20% from February highs.
Australian Prime Minister Scott Morrison said the country's economy must not become reliant on government stimulus as the government looked to to unwind much of its AUD$250bn stimulus measures.
"At some point you've got to get your economy out of intensive care," Morrison said in a speech in Canberra.
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