HONG KONG: Asian stocks are lower fell as spiking coronavirus cases in some US states and in China dents hopes of a quick global economic comeback from the pandemic.
S&P 500 mini futures fell as much as 1.4 per cent in early Asian trade and last traded down 0.7 per cent while MSCI’s broadest index of Asia-Pacific shares outside Japan shed as much as one per cent before paring losses to 0.15 per cent.
Japan’s Nikkei lost 1.3 per cent while mainland China bucked the trend, with blue-chip CSI300 shares posting gains of 0.6 per cent.
The daily count of infections hit a new high in California and Texas, the two most populous states in the country, while Florida, the third largest, also recorded its second-highest daily increase.
Several other US states including Oklahoma, where President Donald Trump plans a campaign rally on Saturday, reported a surge in new infections.
In China, Beijing cancelled scores of flights, shut schools and blocked off some neighbourhoods as it ramped up efforts to contain a coronavirus outbreak that has fanned fears of wider contagion.
“It is a big shock to markets that China, which appears to have successfully quashed the disease, is seeing a second wave. And in the US we see record cases in many states,” said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities.
“All this suggests that the more you re-start the economy, the more infections you have. People have thought the economy will quickly recover in July-September after dismal April-June. But that is now becoming uncertain.”
Some investors also worried about further paralysis in Washington as Trump’s former national security adviser John Bolton accused him of sweeping misdeeds that included explicitly seeking Chinese President Xi Jinping’s help to win re-election.
Border tensions between North and South Korea, and between India and China, also helped sour sentiment for risky assets.
“In the near-term, we have had a lot of risk-off factors including Bolton and geopolitical tensions in Asia,” said Masahiko Loo, portfolio manager at AllianceBernstein in Tokyo.
“But on the other hand, risk assets are supported by ample liquidity from central banks. I don’t see that changing yet and do not expect major sell-off in risk assets.”
Oil prices also dropped with US crude futures falling 1.9 per cent to $US37.49 per barrel, while international benchmark Brent lost 1.4 per cent to $US40.14 a barrel.