Global Stocks Follow U.S. Higher on Coronavirus Vaccine Hopes

International markets rose after U.S. stocks surged on hopes that a new vaccine could help combat the coronavirus pandemic.

Futures tied to the S&P 500 rose 0.6%, suggesting the benchmark U.S. index will extend its advance. The Stoxx Europe 600 ticked up 0.3%, led by gains in banking shares.

Stocks also rallied in Asia. Japan’s Nikkei 225 and Hong Kong’s Hang Seng Index were up 1.5% and 2.1%, respectively. South Korea’s Kospi Composite added 2.3%.

Major U.S. stock indexes rallied between 2.4% and 3.9% Monday after drugmaker Moderna said the first human study of its experimental coronavirus vaccine induced immune responses in some healthy volunteers.

“The markets are positive on the vaccine news because it will help eradicate the concerns of a resurgence,” said Eddy Loh, senior investment strategist at Maybank Group Wealth Management in Singapore. But he said markets would fluctuate until there was more definitive evidence that vaccines were effective.

Mr. Loh said global stock prices broadly reflected expectations of steep falls in earnings this year but a rapid recovery next year.

“2020 has been discounted by the markets. My key concern is whether we can see meaningful economic recovery in 2021,” he said.

More countries and U.S. states have started loosening restrictions aimed at containing the spread of the coronavirus and allowing more businesses to reopen. More than 1.5 million people in the U.S. have tested positive for the virus.

In the U.S., Federal Reserve Chairman Jerome Powell said the central bank would use its “full range of tools to support the economy” in testimony prepared for delivery Tuesday.

Mainland Chinese markets lagged behind regional peers, with the Shanghai Composite trading 0.8% higher. Lee Kian Soon, chief executive officer at Astral Asset Management in Singapore, said investors in China were focused more on the country’s coming annual legislative meetings than international developments.

At the meetings, which were delayed by the pandemic and begin Friday, Premier Li Keqiang is due to present China’s spending plans for the year. If a huge fiscal stimulus is announced, Chinese markets will rally much more, said Mr. Lee, adding that stimulus measures have been rather subdued.

Mr. Lee said he and other global investors were more positive about the speed and certainty of China’s economic recovery, compared with other countries. He likes consumer-staples companies, especially those whose sales are made largely in China.

“Life is still going to go on. People will still need to eat, and the children will still go to school,” he said.

The yield on the 10-year U.S. Treasury note slipped to 0.717% from 0.741% Monday. Yields move inversely to bond prices.

Oil prices extended their rally, which has been fueled by accelerating production cuts and a pickup in demand. Brent crude, the global oil benchmark, rose 1% to $35.04 a barrel.
Source: Dow Jones