A rally in global stocks stalled in Asian trading Tuesday amid concern that a promising coronavirus vaccine study still has hurdles to clear. Bonds and other haven assets steadied after overnight declines.

Shares pared gains in Japan, Hong Kong and Australia, while Chinese stocks fell. S&P 500 futures fluctuated and European contracts dipped. Risks such as the outlook for fresh U.S. fiscal stimulus, surging coronavirus cases and legal challenges to the U.S. election outcome also weighed on sentiment.

Earlier, the S&P 500 closed at a two-month high on news the coronavirus shot being developed by Pfizer Inc. and BioNTech SE prevented over 90% of infections. The Nasdaq 100 fell as investors rotated out of defensive technology names into shares depressed by the economic impact of lockdowns.

Yields on 10-year Treasuries traded around their highest since March. A measure of credit-market risk eased to pre-pandemic levels, and U.S. junk-bond yields fell to a record low. The dollar slipped. Gold and the Japanese yen pared some of Monday’s losses.

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FX Overnight News:

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• The gains on Wall Street were equally strong initially, with the exception of the Nasdaq Composite, which is filled with stocks that have benefitted from the stay-at-home trade. However, late selling ate into the gains of the other main U.S. indices, amid caution over the time scale and the scope of the production of the vaccine. This has translated into losses in Europe Tuesday.
• As welcome as the news of the vaccine is, it doesn’t change “the near-term fact that the global economy faces a challenging winter,” said ING analysts, in a research note.
• “Renewed lockdowns across the eurozone are likely to shave roughly 2% off GDP in the fourth quarter, according to our latest forecasts, while the risk of further restrictions in the U.S. will put a considerable brake on activity.”
• Many European countries continue to be hit hard by the virus, while in the U.S. there were just over 59,000 Covid-19 patients in hospitals across the United States on Monday, the country's highest number ever of in-patients being treated for the disease, according to Reuters data.
• The economic news remains challenging, with the U.K. unemployment rate rising and the important German ZEW economic sentiment index expected to show a sharp decline in November.
• Oil prices steadied Tuesday, after Monday’s sharp gains on the back of the vaccine news. With the number of coronavirus cases continuing to rise in Europe and parts of the U.S., and some lockdown measures in place, the short term picture for crude demand remains challenging.

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FX Overnight Volatility:

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Today's Daily Calendar:

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Chart of the Day:

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