Asian stocks continued to rally on Tuesday, as a growing number of countries take steps toward re-opening. Japan’s Prime Minister Shinzo Abe announced that the state of emergency will be lifted in the last five of the country’s 47 prefectures. Against this backdrop, Japan’s Nikkei 225 jumped to early-March highs and gained 2.55% during the session.
Elsewhere, U.S. biotechnology company Novavax raised hopes for a vaccine for the COVID-19 virus, which added to investor optimism. Also, China central bank Governor Yi Gang said that monetary authorities will strengthen their economic policy and continue efforts to lower interest rates on loans. On the negative side, rising U.S.-China tensions in the aftermath of a proposed national security law for Hong Kong continue to cap market bullishness.
European stock markets opened higher on Tuesday amid growing optimism that a coronavirus vaccine can be found. Novavax said it expects initial results on safety and immune responses in July. Hopes of a vaccine are driving US stock futures higher as well, with Dow futures surging more than 500 points. As a reminder, U.S. markets were closed Monday in observance of Memorial Day.
Meanwhile, the dollar is trading lower against high-yielding counterparts amid a widespread risk-on tone. EURUSD is challenging the 100-DMA, targeting the 1.10 handle. this level could give up if risk sentiment remains buoyed in the short term. Also, the upcoming economic updates out of the Unites States could affect USD dynamics later today.
Elsewhere, crude oil prices remain positive along with risky assets. Brent has settled above the $36 handle but remains shy of $37 as traders remain cautious amid rising US-China trade tensions. On the other hand, the market is supported by dollar weakness, vaccine hopes, OPEC+ measures, as well as the expectations of a recovery in global oil demand. In the short term, the futures could stay afloat but the possibility of a decisive break above the $40 barrier is fairly low.
