Japan shares fall on Covid worries, Asia sees rally over Biden inauguration

Asian shares were mostly higher Wednesday, ahead of Joe Biden's inauguration as US president.

Japan's benchmark lost early gains as worries grew about the surge in coronavirus cases.

Japan's benchmark Nikkei 225 lost early gains to slip 0.4% in morning trading to 28,515.21. Australia's S&P/ASX 200 added 0.6% to 6,783.20, while South Korea's Kospi edged up 0.5% to 3,109.21.

Hong Kong's Hang Seng added 0.9% to 29,921.79, while the Shanghai Composite rose nearly 0.4% to 3,579.93.

Hopes are growing that Biden's planned stimulus for the American economy as well as measures to curb the pandemic will boost regional markets.

While many Asian nations have fared better in the pandemic than European countries and the U.S., worries still run high. Main urban areas in Japan, including Tokyo, are under a state of emergency, with evening dining discouraged. Critics say that's not enough, as deaths related to COVID-19 have been rising.

Chinese New Year is less than a month away. With COVID infection numbers already on the rise again in parts of Asia, there are concerns about what the holiday season may mean for efforts to contain the virus's spread, said Stephen Innes, chief global market strategist at Axi.

On Wall Street, the The S&P 500 rose 30.66 points, or 0.8%, to 3,798.91, pulling to within 1% of its record high set earlier this month. The Dow Jones Industrial Average added 116.26 points, or 0.4%, to 30,930.52. The Nasdaq composite gained 198.68 points, or 1.5%, to 13,197.18.

About 60% of the companies in the S&P benchmark index rose. Technology, communication services and health care stocks accounted for much of the rally, though energy sector companies notched the biggest gain.

Traders continued to bid up shares in smaller companies, a sign of confidence in the prospects for future economic growth. The Russell 2000 index picked up 27.94 points, or 1.3%, to 2,151.14.

US markets were closed Monday in observance of Martin Luther King Day.

The gains this week marked a reversal from last week, when stocks ran out of steam after a strong start to the year. Markets have been rising on enthusiasm about a coming economic recovery as COVID-19 vaccines roll out and Washington gets set to try for another massive round of stimulus for the economy.

Janet Yellen, Biden's nominee to be Treasury secretary, is calling on Congress to do more to boost the economy. In testimony prepared for her confirmation hearing on Tuesday, she said that with interest rates near their record lows, the smartest thing we can do is act big to avoid an even worse downturn in the near term and scarring for the economy in the long term.

Biden last week released details of a $1.9 trillion plan to bolster the economy, which would include $1,400 cash payments for most Americans. Democrats are also pushing for an accelerated rollout of COVID-19 vaccines, a higher minimum wage for workers and enhanced benefits for laid-off workers.

The hope is that such stimulus can carry the economy until later this year, when more widespread vaccinations get life returning to some semblance of normal.

If most of this is implemented, it does suggest significant pickup in economic growth as we head through to the fourth quarter of this year, said David Kelly, chief global strategist at JPMorgan Funds.

The case for more economic stimulus from the government has been rising by the day. Dismal reports have piled up showing how the worsening pandemic has more workers applying for jobless benefits and shoppers feeling less confident.

In energy trading, benchmark US crude added 24 cents to $53.22 a barrel. Brent crude, the international standard, rose 30 cents to $56.20.

In currency trading, the U.S. dollar slipped to 103.78 Japanese yen from 103.99 yen. The dollar cost $1.2142, up from $1.2115.