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  • Equities in Asia-Pacific cheer hopes of further stimulus, faster recovery from pandemic.
  • China PMIs drop to nine-month low, RBA announces another surprise bond auction.
  • Bond bears catch a breather, commodities lick their wounds and US dollar pulls back.

Asian shares rally as market turns optimistic on the ability to overcome the coronavirus (COVID-19) pandemic. The US Food and Drug Administration’s (FDA) approval of Johnson and Johnson’s one-shot vaccine and recently strong expectations of a strong fiscal boost from the UK and the US favored risks off-late.

While the optimism paused US Treasury bond bears around 1.4%, MSCI’s index of Asia-Pacific shares outside Japan gains 0.75% by the press time of early Monday. Further, Japan’s Nikkei 225 rises over 2.0% with upbeat Jibun Bank Manufacturing PMI whereas Australia’s ASX 200 cheers RBA’s additional bond purchase to mark over 1.5% upside. On the same line, New Zealand’s NZX 50 prints over 1.0% rise despite fresh seven-day lockdown in Auckland.

It’s worth mentioning that stocks in China and Hong Kong ignore nine-month low PMIs from the dragon nation whereas those from Indonesia follow a generally upbeat mood ahead of inflation data at home.

Furthermore, India’s BSE Sensex is up around 1.25% on a day while S&P 500 Futures print 1.0% gains while bouncing off the monthly low.

Elsewhere, the US dollar index (DXY) eases from a seven-day top whereas gold licks its wounds around $1,740 after a heavy fall on Friday.

Given the month-start activity numbers from the US, Britain and Eurozone in the pipeline, investors will have a busy day. However, the major focus should be given to the covid relief package news as well as updates concerning vaccine developments. In doings, Treasury moves should be carefully observed.

Also read: US 10-year Treasury yields, S&P 500 Futures portray risk-on mood

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