Local Stocks Climb To Highest Level Since March

Hong Kong shares soared more than 3 percent on Monday, in line with a rally across Asia, as traders are cheered by healthy economic data helping them look past a worrying spike in new virus infections.

The Hang Seng Index jumped 3.5 percent, to 26,248 – its highest level since the start of March.

Jeffrey Halley at OANDA said: "Hong Kong concerns are fading as fast as they began, as the new China-imposed security laws allow money to talk without the annoying interference of protestors."

But he added that the "story still has more to run in a geopolitical context", pointing out that Donald Trump was still to sign a bill censuring Chinese officials linked to the law, which would likely lead to retaliation by Beijing.

"The scale of those measures will dictate whether geopolitics will have more to say on global financial markets," he said in a note.

The market in Shanghai jumped 4.2 percent, to 3,286 while the Shenzhen market gained over 3 percent, to 2,105.

Taipei, Tokyo, Seoul, and Singapore also ended the morning session in positive territory.

The easing of lockdowns is providing hope the global economy will bounce back from an expected recession this year, with Britain's pubs reopening at the weekend and tourist attractions around Europe either now open or planning to.

Better-than-forecast data on US jobs creation and factory activity have also provided a boost to confidence, as are hopes for a vaccine, which observers say is key to kickstarting any major recovery.

Traders have piled back into stocks in a major way in recent months – with the help of vast government and central bank support – with analysts suggesting the gains are also being helped by a fear of missing out on the rally.

But there remains trepidation on trading floors as new infections spike around the world.

Some US states are reporting record daily increases, with a number of officials considering reimposing lockdown measures, while Brazil and India are also seeing worryingly large rises.

And Australia said it would effectively seal off the state of Victoria from the rest of the country as authorities struggle to control a surge in cases.

The outbreak is weighing on Sydney stocks, which were flat in afternoon trade.

"For now the positive data surprises and huge fiscal and monetary stimulus are the overwhelming forces," National Australia Bank's Rodrigo Catril said in a note.

"But the increase in Covid-19 infections, not just in the US, means that they need to be closely monitored – the introduction of more severe containment measures has the potential to derail the positive vibes in markets." (AFP)

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