Asian shares slip as surging Covid-19 cases knock sentiment

Hong Kong/New York — Asian stocks markets fell on Tuesday as soaring global coronavirus cases and slow progress on a US stimulus deal hammered investor sentiment and took a toll on Wall Street.

MSCI’s gauge of Asia Pacific stocks outside Japan was down 0.43%, with Australia’s ASX 200 off 1.1% to an almost three-week low.

China’s CSI300 Index edged down 0.1%, as investors looked out for any news from a meeting of China’s Communist Party leaders to set the next five-year plan.

Data out earlier in the day also showed China’s industrial profits grew at a slower pace in September, suggesting a recovery in the manufacturing sector is yet to be bedded-in.

In Japan, the benchmark Nikkei 225 dropped 0.28% in morning, trade while Hong Kong’s Hang Seng index was down 1.02%.

US indices fell sharply overnight to open the week’s trading, as anxiety over new record daily Covid-19 cases in the US, Russia and France weighed on investor appetite.

Adding to the gloom, White House economic adviser Larry Kudlow told reporters on Monday that talks over a coronavirus relief package have slowed, though house speaker Nancy Pelosi remained hopeful an agreement can be reached before the November 3 elections.

Many Senate Republicans have resisted legislation of a scope that Pelosi and Mnuchin have discussed, totalling about $2-trillion.

“The challenge for markets is that in most cases they are already pricing a strong economic bounce. The new outbreaks, and the potential for a double-dip recession, directly contradict this assumption,” Michael McCarthy, chief market strategist at CMC Markets in Sydney.

National polls give Democrat Joe Biden a solid lead over President Donald Trump but the contest is much tighter in battleground states that could decide the outcome.

The sharp stock market decline set a bleak tone ahead of a busy third-quarter earnings season, with large US tech firms such as Apple, Amazon.com and Google-parent Alphabet set to report. Microsoft reports its results Tuesday.

The Dow Jones Industrial Average fell 2.29% overnight, the S&P 500 lost 1.86%, while the Nasdaq Composite dropped 1.64%.

The dollar was holding largely steady, moving just a touch lower to trade at 92.951 against a basket of six currencies.

Much of the trading in currency markets, as well as other asset markets, was buffeted by the renewed coronavirus fears.

In early Asia, oil prices managed to staunch an extended sell-off though the outlook was weak due to the virus-induced worries over demand. Brent crude was up 12c, or 0.3%, at $40.58 a barrel by 12.40am GMT, having dropped more than 3% overnight. US oil was up 13c, or 03%, at $38.69 a barrel, after also declining more than 3% on Monday.

The safe-haven spot gold added 0.3% to $1,907.41 an ounce on Tuesday morning.

Reuters