TOKYO/HONG KONG (Reuters) – Asian shares hit a five-month high and European equity market futures extended gains on Tuesday after European Union leaders agreed on a massive stimulus plan for their coronavirus-blighted economies.

Hopes that vaccines against the COVID-19 disease might be ready by the end of year also supported riskier assets, following promising early data from trials of three potential vaccines.

News of the EU deal saw the euro rise to a fresh four-month high of $1.1470 before profit-taking pulled it lower.

The EU deal, which came after Summit chairman Charles Michel presented compromises on a 750 billion euro recovery fund, is critical to dispel doubts about the bloc’s very future.

European markets were set to open higher with pan-region EuroSTOXX 50 futures and FTSE futures rising 0.5% and German DAX futures trading 0.6% higher during Asia trading hours.

E-Minis for the S&P 500 were up 0.2%, a day after tech shares pushed the Nasdaq Composite up 2.5% to a record closing high, and the S&P500 hit a five-month peak.

MSCI’s broadest index of Asia-Pacific shares outside Japan gained 1.9% to its highest level since February.

“It’s a pretty good message compared to other countries,” Jefferies chief global equity strategist Sean Darby said, referring to the outcome of the EU Summit. “The markets should take this news very well.”

The risk-on approach in the global markets in the last few months has mainly been boosted by the record levels of stimulus announced by the policymakers to cushion the economic impact of the COVID-19 pandemic and ensuing lockdowns.

But some analysts are not convinced about the sustainability of the rally, and the positive sentiment faces reality checks later this month as corporate earnings season gets in full swing in many countries.

Harry Richards, fund manager for fixed-income at Jupiter Asset Management said in a note on Tuesday that the economy was still “experiencing stresses that comfortably exceed” those during the global financial crisis.

“Monetary and fiscal easing has acted as an anaesthetic, numbing financial markets to the true gravity of the situation at hand,” he said. “But it is really the longer term impacts of the crisis that…are underappreciated by the wider market.”

With the announcement of the EU summit outcome, the investor focus has now shifted to possible U.S. stimulus measures to help the economy after $3 trillion in stimulus earlier this year.

“The U.S. will likely adopt stimulus by the first week of August. We don’t know its exact size but I bet it will be something like $1 to $1.5 trillion,” said Nobuhiko Kuramochi, market strategist at Mizuho Securities.

Advisers to President Donald Trump and congressional Democrats were set to discuss the next steps in responding to the coronavirus crisis on Tuesday.

Elsewhere in Asia equity markets, Japan’s Nikkei rose 0.8%, while South Korea’s benchmark KOSPI advanced 1.3%. The Australian stock index was up 2.2%, on track to post its best day since June 16.

In China, the blue-chip CSI300 index was down 0.1% in the afternoon trade, reversing a strong streak of gains in the last few sessions.

In the currency market, the Chinese yuan was little changed, trimming an early advance to a four-month top as simmering tensions between Beijing and Washington undercut the boost from extended inflows into the mainland stock market.

The onshore yuan was steady from the previous close, fetching 6.9923 per dollar at midday. The offshore yuan was also flat at 6.9890 per dollar. The yen was little moved at 107.34 to the dollar.

Gold held firm at $1,818 per ounce, having hit a nine-year high of $1,820.4 on Monday.

Oil prices were little changed, trapped in the narrow trading band of the past three weeks as investors gauged hopes for a recovery in oil demand against fears of new lockdowns due to a growing number of coronavirus cases. [O/R]

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