Japan’s benchmark Nikkei 225 added 1.5% to finish at 20,433.45. Australia’s S&P/ASX 200 jumped 1.8% to 5,559.50. South Korea’s Kospi was up 2.2% to 1,980.07. Hong Kong’s Hang Seng gained 2.1% to 24,442.42, while the Shanghai Composite edged up 0.7% to 2,895.46, The Associated Press (AP) reported.
India’s Sensex added 1.8% to 30,558.23 and markets also rose in Taiwan and Southeast Asia.
“The mood is assertively risk-on with sentiment having been tipped over by fresh hopes sparked for a COVID-19 vaccine,” said Jingyi Pan, market strategist for IG.
Pan said reports that drug company Moderna had found promising results on a vaccine have “no doubt been the biggest mood booster for markets, given the fact that the lingering coronavirus implications remains the single biggest issue holding back the market from recovery and a contributor to other risk factors including US-China tensions.”
Massachusetts-based Moderna saw its stock jump 20% in New York trading Monday.
The S&P 500 climbed 3.2%, its best day since early April. The gains erased all of its losses from last week, when the index posted its worst showing since late March and its third weekly loss in the last four. Bond yields rose broadly in another sign that investors were becoming more optimistic.
Investors are hoping that a working vaccine for COVID-19 can be developed and that it will help reassure people and businesses as economies reopen.
“The question of how quickly people come back, or will they come back to the way they used to do things, that’s much different if you have a vaccine,” said Megan Horneman, director of portfolio strategy at Verdence Capital Advisors.
Economies in Asia also are starting to relax restrictions, although worries remain about another surge in illnesses. In crowded cities it is difficult to maintain social distancing. As the cases drop, people are letting their guard down in going out and mingling in crowds.
But traders have been encouraged by signs that, so far at least, there hasn’t been a lot of data implying a resurgence in the number of COVID-19 cases, said Sam Stovall, chief investment strategist at CFRA.
Bonds yields rose overnight, another sign that pessimism was diminishing. The yield on the 10-year Treasury note, a benchmark for interest rates on many consumer loans, climbed to 0.72% from 0.64% late Friday. On Tuesday morning it was at 0.70%.
Fears of a crushing recession due to the coronavirus sent the S&P 500 into a skid of more than 30% from its high in February. Hopes for a relatively quick rebound and unprecedented moves by the Federal Reserve and Congress to stem the economic pain fueled a historic rebound for stocks in April.
May got off to a downbeat start as investors balance cautious optimism of a recovery as economies around the world slowly open up again against worries that the moves could lead to another surge in coronavirus infections and more economic uncertainty. But Monday’s strong start to the week reversed all of the market’s losses so far this month.
