Stocks across Asia Pacific rallied as investors were cheered by the results of a US trial for a coronavirus vaccine and hopes that economies around the world could gradually begin reopening as harsh lockdowns are eased.

That optimism helped overshadow growing concerns over a deepening US-China rift, with Huawei emerging as a significant source of tension. In the latest development, the Chinese telecoms company has warned that new sanctions from Washington put its survival at stake.

Hong Kong’s benchmark Hang Seng index was up 2.1 per cent in midday trading on Tuesday while China’s CSI 300 index of Shanghai and Shenzhen-listed stocks added 0.6 per cent. Japan’s Topix index climbed 1.7 per cent and Australia’s S&P/ASX 200 gained 1.8 per cent.

That followed a buoyant session on Wall Street, where the S&P 500 rallied 3.2 per cent to its highest level since early March. Sentiment got a shot in the arm after biotech company Moderna said its potential Covid-19 vaccine had delivered positive results in early small-scale human trials.

Expectations for an economic rebound from the pandemic, in part due to robust support measures by large central banks, have helped drive a sharp rise in global stock markets. The S&P 500 is up about a third from a low hit in late March.

Policymakers in Germany said this week that there were indications “a recovery is under way”, raising the possibility of a stronger-than-hoped performance for European economies as they resume business and industrial activity.

However, futures markets suggested that the rally in equity markets could fizzle when trading begins on Wall Street later in the day, with the S&P 500 expected to fall 0.4 per cent. London’s FTSE 100 was tipped to drop 0.3 per cent.

Oil prices also lost momentum, after a rally on Monday spurred by signs that crude demand was picking up and supply cuts led by Opec had begun to take effect.

West Texas Intermediate, the US marker, rose 0.4 per cent to $31.94 a barrel after jumping 8 per cent a day earlier and back above the $30 mark for the first time since mid-March. Brent crude, the international benchmark, dropped 0.6 per cent to $34.59 a barrel.

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