Asian markets climb on vaccine optimism and signs COVID-19 cases could be easing

Japan’s benchmark Nikkei 225 NIK, +1.28% jumped 1.3% in morning trading to 30,466.77, after closing the day before above 30,000 for the first time since August 1990. South Korea’s Kospi 180721, +0.52% gained nearly 0.4% to 3,158.78, while Australia’s S&P/ASX 200 XJO, +0.70% added 0.5% to 6,901.80.

Despite data that show regional economies have been hit hard by the pandemic, investors are still sending indexes ever higher. Analysts think Asian shares will continue to rally, cheered by the recent gains on the U.S. and European markets.

Hopes for a recovery are being driven partly by the COVID-19 vaccine rollouts, said Prakash Sakpal, senior economist Asia at ING.

“Gains will still likely be capped as investors remain wary of newer strains of the variant, which may be more resilient to existing vaccines,” he added.

A vaccine rollout is starting in Japan this week, a nation that’s lagged behind the U.S. and Europe with the inoculations. It begins with about 20,000 medical workers, followed by 3.7 million more medical workers. The government goal is to have shots available for elderly people in April, and for everyone by June.

Government data earlier this week showed the Japanese economy had rebounded from the growth drop experienced earlier over COVID-19, but contracted for 2020 overall. It’s unclear whether the world’s third largest economy can stay on the growth track, as worries continue about an ongoing wave of infections.

Uncertainty about whether the Tokyo Olympics can go on in July, postponed from last year, with no foreign spectators or perhaps no spectators at all, is adding to the gloom.

Still, optimism remains over stimulus measures, including trillions of dollars more aid from the U.S. government. Some companies have released surprisingly strong earnings reports, adding to investor enthusiasm.

“Global equity markets remain on the climb into this week with the multitude of positive factors, including U.S. fiscal stimulus hopes, positive earnings and the vaccine rollout supporting sentiment,” said Jingyi Pan, senior market strategist at IG in Singapore.

U.S. benchmarks ended last week at record highs.

In energy trading, U.S. benchmark crude oil CL.1, +0.61% added 72 cents to $60.19 a barrel in electronic trading on the New York Mercantile Exchange. It gained $1.23 to $59.47 per barrel on Friday. Brent crude BRN00, -0.17%, the international standard, gained 15 cents to $63.45 per barrel.

In currency trading, the U.S. dollar inched up to 105.50 Japanese yen USDJPY, -0.01% from 105.39 yen. The euro EURUSD, +0.19% strengthened to $1.2149 from $1.2131.