Asia markets struggle again as virus trumps Wall St bounce
HONG KONG (AFP) – Asian investors struggled to match their Wall Street counterparts Wednesday, with markets drifting as spiking infection rates, new containment measures and still no US stimulus fuel concerns about economic recovery.
After a global rally since March’s nadir, a gloom has descended on equities this month, with uncertainty leading into November’s presidential election and ongoing China-US tensions adding to the mix.
US stocks broke an extended run of losses Tuesday as traders went bargain hunting, while the technology sector was also boosted by the prospect of people being forced to stay at home again.
With a record of nearly two million new virus infections last week, leaders are fighting to prevent another explosion of cases that forced economically devastating national lockdowns around the world earlier in the year.
British Prime Minister Boris Johnson unveiled new steps that will from Thursday see English pubs and other hospitality venues close at 10 pm local time, while he also halted the planned phased return of fans to live sporting events that was due from October 1.
“To help contain the virus, office workers who can work effectively from home should do so over the winter,” the government said, despite fears for the wider economy as many city centres turn into ghost towns.
In Washington, Fed boss Jerome Powell warned Congress the world’s top economy would see a slower recovery if lawmakers did not push ahead with a fresh rescue package, noting that stimulus cheques and expanded unemployment payments moderated the impact of the virus earlier this year.
At the same testimony Treasury Secretary Steven Mnuchin said there would be a strong rebound in the third quarter but admitted that “some industries particularly hard bit by the pandemic require additional relief”.
However, political hostilities appear to be worsening on Capitol Hill ahead of the election and there is little expectation that Democrats and Republicans will hammer out an agreement before then. That is despite fresh unemployment benefit supplements passed by Donald Trump in an executive order running out in some states.
Still, Stephen Innes at AxiCorp added that while central bank support had been crucial, investors were now keen to see real signs of recovery.
“Although central banks can do more, equity markets have likely reached their multiple policy deluges’ saturation point,” he wrote in a note. “And as such, the stock markets might continue to struggle to make new highs until there are more positive signs of real economic growth.”
Tokyo ended the morning session 0.6 percent down as it reopened after an extended weekend break while Hong Kong, Shanghai, Seoul, Taipei, Singapore and Manila were also lower. But Jakarta, Bangkok and Wellington eked out gains, while Sydney jumped more than one percent.
“This is a massive roller coaster and you just have to hold your stomach,” Erin Gibbs, at Gibbs Wealth Management, told Bloomberg TV. “We are most likely to see this continued high volatility” until the vote, she added.