© Reuters. Men in protective face masks chat in front of a screen in Tokyo that shows the average of Nikkei stocks and global stock indices during the coronavirus disease (COVID-19) outbreak
By Alun John and Tom Westbrook
SINGAPORE (Reuters) – Asian stock markets hit more than a two-week high on Tuesday after US President Donald Trump was discharged from hospital after being treated for COVID-19 and the prospects for a new US stimulus package appeared to be improving.
European stocks are likely to follow: Euro Stoxx 50 futures () rose by 0.25%, German DAX futures () by 0.2% and futures () by 0.06%.
Wall Street had previously rallied for Trump's health improvement, and futures indicated that European stocks would follow suit.
Gold, bonds and the dollar suffered losses on improving risk appetite, while oil made strong gains overnight. (O / R)
Trump returned to the White House on Monday after a three-day hospital stay and said he was feeling "really good" despite one of his doctors warning he may not be out of the woods yet.
MSCI's broadest index for stocks in Asia Pacific outside Japan () rose 0.67% to a two and a half week high, with Hong Kong () among the top companies, up 0.73%. The Japanese Nikkei () gained 0.56%.
U.S. House spokeswoman Nancy Pelosi and Treasury Secretary Steven Mnuchin spoke on the phone for about an hour, preparing to speak again Tuesday to continue their work on an agreement on spending on coronavirus aid .
In addition to Trump's health, "there is also some market attention as to whether the US Congress will pass the Additional Incentives Act," said Tai Hui, chief Asia Market Strategist at J.P. Morgan Asset Management
"If we see any kind of stimulus, I think the market will be positive as much of the key support from the preliminary round has expired," he said.
S&P 500 futures () were fairly flat overnight after the S&P 500 index's best daily gain () in a month.
China's markets were closed for a vacation.
Optimism hit gold and other safe havens.
fell 0.1% to $ 1,911 an ounce after hitting a two-week high on Monday, and the US fell 0.21%.
Bond markets followed suit as a heavy US bond sell-off carried over to Asia on Monday Tuesday.
The benchmark's 10-year Japanese government bond futures fell to a monthly low in the steepest decline in more than five weeks, and South Korean yields rose. However, (JP / T) analysts said sales in other Asian markets are more subdued than the US market as regional investors price in a victory for Democratic presidential candidate Joe Biden in the November 3rd election. "The sell-off of US yields is more due to Trump leaving the hospital," said DBS strategist Duncan Tan in Singapore. "This will reduce some of the uncertainties surrounding the election process. At least in the short term, it will remove the risk of having to consider whether Trump or Biden can vote." The 10 year returns () in the US were flat at 0.7718%.
In the forex markets, the dollar, alongside the yen, has been under pressure on other majors as higher yields can often draw streams from Japan. (FRX /)
The dollar appreciated against the yen to hit 105.62 yen, not far from its three-week high.
The typically risk-friendly Australian dollar gained shortly after the Reserve Bank of Australia put rates on hold, as expected, but later fell back and the potential for further monetary easing limited profits.
Oil rose more than 5% overnight and rose even further in Asia, aided by Trump news and a supply shortage when a strike shut down six Norwegian offshore oil and gas fields. (OR)
U.S. Crude Oil () was last at $ 39.39 a barrel, up 0.43%, and Brent Crude () rose 0.48% to $ 41.49.