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  • Asian equities follow Wall Street’s footsteps despite latest challenges to risks.
  • Hopes of virus cure, additional easing propelled risks on Monday.
  • US-China tension, Aussie-Sino trade war keep markets fears on the table.

Despite fresh threats to Monday’s risk-on mood, Asian shares remain bid while heading into the European session on Tuesday. The reason could be traced from the hopes of the coronavirus (COVID-19) cure as well as expectations of further stimulus from the Fed, BOE and Europe. Also portraying the market optimism could be the upbeat performance of oil and gold prices.

Amid ramping US-China tension, US President Donald Trump recently announced to freeze the nation’s contribution to the World Health Organization (WHO). The Republican leader cites the organization’s favor to the dragon nation, as far as the virus outbreak is concerned, as a reason to stop the support. This pushes China’s Global Times to fasten writing speed and talk down the US allegations.

Earlier during the day, China levied 80% tariffs on Australian barley. The nation’s move follows the previous week’s ban of four Aussie processors’ meat. Markets relate the Asian giant’s trade-negative measures as retaliation to Australian PM Scott Morrison’s push for an investigation into the virus spread.

Elsewhere, the early text of Fed Chair Jerome Powell’s testimony, up for presenting at 14:00 GMT, suggests the central bank’s readiness to add further stimulus to combat the pandemic.

That said, MSCI’s index of Asia-Pacific shares outside Japan rises 1.4% whereas Japan’s NIKKEI rises 2.0% to 20,535 by the press time. Further, stocks in Australia seem to ignore Chinese move while cheering RBA minutes with over 2.0% gains whereas Chinese markets are around 1.0% positive as we write. Moving on, New Zealand’s NZX 50 prints 0.70% gains while South Korea’s KOSPI, Indonesia’s IDX Composite and Indian equity benchmarks are all up around 2.0% on a day.

It should also be noted that the US 10-year Treasury yields drop three basis points (bps) to 0.713% by the time of writing. It’s worth mentioning that Wall Street benchmarks gained more than 2.0% at the end of Monday’s session.

Looking forward, Fed Chair’s testimony will be the key to watch but the trade/virus headlines are less likely to move from the driver’s seat.