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Asian markets turn lower as virus spikes around planet

Asian markets turn lower as virus spikes around planet

HONG KONG: Shares saw further losses Monday as a spike in new coronavirus infections across the planet forced governments to impose fresh containment measures, fuelling fears about the stuttering economic recovery.

Traders are also keeping tabs on Europe, where leaders are struggling to unite over an $860 billion rescue package for the battered European Union.

The rally that has characterised equity markets since hitting a March low is showing signs of stalling as the pandemic rages on, with new infections from Australia to the United States.

The spikes — Hong Kong saw a record rise Sunday, while Florida’s has been described as “out of control” — have led leaders to unveil new measures to curb the disease’s spread, including closing bars and restaurants and making masks compulsory.

That has raised questions about the pace of the global economy’s recovery from an expected recession this year.

An index of US consumer sentiment last week showed it hit a three-month low in July.

“When coupled with the recent stickiness of jobless claims, the Michigan survey suggests some risk that the positive data surprises that dominated through June might have hit a brick wall,” said AxiCorp’s Stephen Innes.

Shane Oliver, of AMP Capital Investors, added: “Our base case remains for the economic recovery to continue, but for the deep V rebound evident in much recent data to give way to a slower bumpier recovery going forward.

“Shares are still vulnerable to a further correction or consolidation, with renewed lockdowns and the US presidential election being the main risks.”

Investors are keeping an eye on Washington, hoping lawmakers will press ahead with fresh stimulus measures for the world’s top economy, with unemployment benefit bonus payments due to expire on July 31.

However, there are disagreements over how much to pay and Donald Trump is trying to include tax cuts. Failure to extend the scheme would have a catastrophic impact on poor families.