Asian share markets mostly shot higher on Tuesday driven by regional airline, tourism and travel stocks as global investors applauded progress in the development of a coronavirus vaccine which lifted confidence in a world economic recovery.
Pfizer Inc said its Covid-19 vaccine, developed with German partner BioNTech SE, was more than 90% effective in preventing infection, marking the first successful results from a large-scale clinical trial.
"Markets will remain on the lookout for more promising vaccine data in addition to news of a fiscal reboot," PineBridge Investments portfolio manager Mary Nicola told Reuters.
The vaccine news sparked renewed optimism in equities around the world but oil prices slipped in Asian trade after posting the biggest one-day percentage gain in five months.
However, some analysts sounded caution over the speed in which the vaccine could be implemented.
"Given more tests are needed, then the approval process. Manufacturing and distribution would mean the vaccine, if truly effective, is still months away from mass deployment," said Tai Hui, chief Asia market strategist at JPMorgan Asset Management.
Brazil's health regulator said on Monday it had suspended clinical trials for China's Sinovac coronavirus vaccine after adverse effects had emerged.
Japan's Nikkei 225 rose 1.1% after reaching a 29-year high in early trade and Australia's S&P/ASX 200 rose 1.6%.
Hong Kong's Hang Seng index futures was up 1% in early trade but there was marginal weakness in China as the CSI300 Index slipped by 0.24%. MSCI's broadest index of Asia-Pacific shares outside Japan was 0.12% higher.
Airline, travel and tourism stocks across Asia were beneficiaries of the optimism prompted by the vaccine announcement.
Qantas Airways gained 8.6% to hit its highest level since March, Japan Airlines shot 17.6% higher and ANA Holdings rose 16.4%.
In Hong Kong, Cathay Pacific Airways shares jumped 14.9%, the best since July.
"Markets will get ahead of themselves in the short term with the vaccine news but longer term it feels like it is going higher," Ord Minnett advisor John Milroy said from Sydney.
Early Tuesday, Japan's Prime Minister Yoshihide Suga instructed his cabinet to design a fresh stimulus package to help revive the nation's flagging economy to offset the ongoing effects of coronavirus..
The stronger performance on Asian markets followed the positive lead overnight from the United States and Europe.
On Wall Street, the Dow Jones Industrial Average rose 2.95%, the S&P 500 gained 1.17% while the Nasdaq Composite dropped 1.53%. E-mini futures for the S&P 500 rose 0.47%.
Pfizer's announcement jolted European shares to an eight-month high, building on expectations of more stable trade policies following the U.S. election.
While stocks have also rallied on the assumption that Democrat Joe Biden would be the next U.S. President, the top Republican in U.S. Congress on Monday did not acknowledge Biden as president-elect, raising concerns about a rough transition of power.
Senator Mitch McConnell said in a speech that President Donald Trump was well within his rights to look into charges of election "irregularities" but did not offer any evidence of fraud.
The Australian dollar fell 0.18% versus the greenback at $0.7272.
The yen strengthened 0.3% to 105.03 per dollar, while sterling was last trading at $1.3174, up 0.09% on the day.
The vaccine news also sent long-dated U.S. Treasury yields sky-rocketing in their biggest one-day jump since March. The yield curve, an indication of risk appetite, hit its steepest level since March.
Bonds had their biggest selloff since recoiling from March peaks. The yield on benchmark 10-year U.S. government debt, which rises when prices fall, jumped 10.3 basis points on Monday and held above 0.9% on Tuesday at 0.9099%
The CBOE Market Volatility index, a barometer of investor anxiety, hit its lowest closing level since late August.
Oil prices surged, posting their biggest daily percentage gain in more than five months as the vaccine news and an OPEC output deal fueled optimism about rebounding demand..
However, in Asian trade some of the momentum fell away.
Light crude oil fell by 1.49% during the Asian session to $39.69 a barrel while brent crude slipped 1.25%.
Spot gold added 0.32% to $1,867.6 an ounce.