Asian markets slide as virus fears spark Wall Street sell-off

Tokyo/New York — Asian shares fell sharply on Friday after Wall Street and oil tumbled over growing concerns that a resurgence of coronavirus infections could stunt the pace of recovery in economies reopening from lockdowns. 

MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 1.3%. Australian stocks fell 1.74%, while shares in China slide 0.67%.

Oil futures slumped for a second consecutive trading session due to worries about weak global energy demand, which weighed on the currencies of oil producers and countries that rely on exporting commodities.

The Chinese yuan headed for its biggest daily decline in two weeks, underscoring investors’ risk-averse mood in Asia.

The three major US stock indices fell more than 5% on Thursday, posting their worst day since mid-March, when markets were sent into free fall by the abrupt economic lockdowns put in place to contain the pandemic.

“All of a sudden the coronavirus, which has been an also-ran story for some days now, became more important as the virus began picking up in some states, and the market began thinking there may be delays to reopening,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.

US stock futures, the S&P 500 e-minis, rose 1.1% in Asia on Friday, but that did little to help sentiment.

Japan’s Nikkei stock index slid 1.22%, and shares in South Korea fell 2.24% as some investors booked profits from a recent rally in global equities.

Coronavirus cases have jumped in several US states in recent days, raising concern among experts who say authorities have loosened restrictions put in place to contain the spread too early.

Cases in New Mexico, Utah and Arizona rose 40% for the week ended Sunday, a Reuters tally shows. Florida and Arkansas are other hot spots.

The US Federal Reserve released a gloomy economic outlook at the end of its two-day monetary policy meeting on Wednesday. Chair Jerome Powell warned of a “long road” to recovery.

Economic data appeared to back up the Fed’s projections, with jobless claims still more than double their peak during the Great Recession and continuing claims at an astoundingly high
20.9-million.

US crude slid 1.87% to $35.66 a barrel, while Brent crude eased 1.43% to $38 per barrel in Asia on Friday hit by renewed concerns over demand and a large build-up of US crude inventories.

The Mexican peso and the Norwegian krone fell against the US dollar as the decline in crude prices hurt currencies from oil-producing countries.

Commodity-linked currencies, the Australian and New Zealand dollars, snapped a three-week run of sharp gains.

In the onshore market, the yuan fell 0.3%, headed for its biggest daily decline since May 27.

The 10-year US Treasury yield edged up slightly to 0.6853% on Friday.

Bond prices were well supported after they rallied after the Fed’s commitment on Wednesday to years of extraordinary support to counter the economic fallout from the pandemic.

Reuters