By Joanne Chiu
International markets mostly rose as the first major trading day of 2021 began, on hopes that continued government stimulus, a weaker dollar and the rollout of coronavirus vaccines will bode well for equities.
Most major stock benchmarks in the Asia-Pacific region advanced. South Korea's Kospi Composite led gains, closing 2.5% higher, while gauges in Australia, Hong Kong, mainland China and Taiwan also rose.
Japan's Nikkei 225 lagged behind its peers, and the yen strengthened, after Prime Minister Yoshihide Suga said he may declare a state of emergency in Tokyo and surrounding areas as new coronavirus infections continue to rise.
U.S. stock futures inched higher after major U.S. benchmarks set records on the final day of 2020.
Ben Luk, senior multiasset strategist at State Street Global Markets, said one key focus for investors is Tuesday's runoff elections in Georgia. The vote, which will determine which party controls the U.S. Senate, has implications for corporate tax rates and for future economic-relief packages. "That will be the first risk to markets" for 2021, he said.
Key commodity futures prices rose, with Brent crude, the global oil benchmark, adding 1.3% to $52.45 a barrel, and gold gaining 1.7% to $1,927. The dollar weakened, with the WSJ Dollar index slipping 0.3% to 84.76, and the Chinese yuan rallying to 6.46 per dollar.
Paul Sandhu, head of multiasset quant solutions for the Asia-Pacific region at BNP Paribas Asset Management, said he expected the dollar to continue weakening, pressured in part by a likely increase in U.S. spending on infrastructure and other potential stimulus measures.
Mr. Sandhu said markets in Asia had largely picked up where they left off in 2020, as investors continue to favor riskier assets like equities in emerging markets such as China, South Korea and Taiwan. He said he expected Asia to be one of the most robust parts of global markets, thanks in part to its relative success in containing the coronavirus.
Bitcoin, the most popular cryptocurrency, pared some of the gains it had registered during the New Year holiday break. It rose from less than $29,000 on New Year's Eve to a high of more than $34,500 on Jan. 3, according to CoinDesk data. On Monday afternoon in Hong Kong, it hovered around $32,900.
"Investors globally are looking for new asset classes to invest in and bitcoin looks quite attractive because it's an uncorrelated asset class, " said Mr. Sandhu.
China's Shanghai Composite gained nearly 1%, even after a private survey showed China's manufacturing activity moderated in December due to weak demand for the country's exports.
Mr. Luk at State Street said the data pointed to continued fragility in the Chinese economy. But he said that helped ease concerns that China's central bank would act prematurely to tighten monetary policy, and instead suggested it would take a more cautious stance.
Write to Joanne Chiu at joanne.chiu@wsj.com
(END) Dow Jones Newswires
01-04-21 0315ET
