SHANGHAI – Stocks in Asia fell on Friday (Nov 13), following on from selloffs in the United States and Europe as investors feared the economic impact of an accelerating rise in coronavirus infections.
The United States has reported fresh daily records for new Covid-19 case hospitalisations this week, prompting cities and states, including Chicago, Detroit and California, to re-impose public health restrictions.
European officials have also warned against complacency and said measures to control infections must continue despite hopes that vaccines under development could help to slow the spread of the novel coronavirus.
US Federal Reserve Chair Jerome Powell said on Thursday during a discussion with other central bankers that progress in developing a coronavirus vaccine was welcome news but that near-term economic risks remain as infections accelerate, underscoring the likely need for additional government stimulus.
Against that grim backdrop, MSCI’s broadest index of Asian shares outside Japan dipped 0.25 per cent in early trade as shares across the region stumbled. Japan’s Nikkei 225 fell 0.95 per cent.
Chinese blue-chips led losses, falling 1.21 per cent. Australian shares lost 0.47 per cent, Seoul’s Kospi was down 0.16 per cent and the Hang Seng was 0.55 per cent lower.
Singapore’s Straits Times Index was down 0.36 per cent at 10.42am local time.
Some investors saw a buying opportunity in the slump.
“My view is this is the dark just before dawn,” said Michael Frazis, portfolio manager at Frazis Capital Partners in Sydney.
“You’ve got the second wave of coronavirus, new sets of shutdowns, clear problems around the world, travel dropping off again… But at the same time, we have the strongest possible evidence that we do have a vaccine and many people will be vaccinated over the next few months.”
“We think this is all actually very positive and it’s actually a good time to be investing in markets,” he said.
Frazis said many risks nevertheless remained for short-term traders amid ongoing uncertainty over issues like the US stimulus response.
On Thursday, top Democrats in the US Congress urged renewed negotiations over a multitrillion-dollar coronavirus aid proposal, but the top Republican immediately rejected their approach as too expensive, continuing a months-long impasse.
Wall Street dropped on Thursday in a broad sell-off.
The Dow Jones Industrial Average fell 1.08 per cent, pulled lower by industrial and financial companies sensitive to economic growth. The S&P 500 lost 1.00 per cent and the technology-heavy Nasdaq Composite dropped 0.65 per cent.
US Treasury yields also sank on Thursday, weighed down by the persistent rise in coronavirus cases and data showing inflation remained benign in the world’s largest economy. The US yield curve, viewed in part as a gauge of risk appetite, also flattened.
On Friday, US yields continued to tick lower, with benchmark 10-year Treasury notes yielding 0.8766 per cent, compared to a Thursday close of 0.886 per cent.
“Bond yields, which had been flirting with the 1.0 per cent level in terms of the US 10Y Treasury, have … snapped back sharply in terms of yield,” Rob Carnell, Asia Pacific head of research at ING said in a note.
“That move most likely got a further nudge from the softer-than-expected US inflation data for October which were released yesterday, and which tally with a weaker economic reality.”
Rising risk aversion lifted the safe-haven yen, with the dollar dropping 0.18 per cent against the Japanese currency to 104.93 . The euro was flat in Asian morning trade and the dollar index ticked 0.2 per cent higher to 92.987.
An unexpected rise in US crude stockpiles exacerbated virus-linked economic fears in commodity markets, pushing US crude 1.63 per cent lower to US$40.45 per barrel.
Global benchmark Brent crude dropped 1.45 per cent to US$42.90 per barrel.
Spot gold gained 0.17 per cent to US$1,878.97 per ounce.