Asia's markets track US as Covid-19 infections surge

The S&P 500 had its biggest loss in a month on concern rising coronavirus cases will hurt the global economy and prospects dimmed for fiscal aid from Washington before the US election

Pedestrians walk past an electronic quotation board displaying company's stock prices on the Tokyo Stock Exchange in Tokyo. Asian stocks were lower a day after the S&P 500 had its worst trading day inShow more

Asian stocks followed their US counterparts lower Tuesday on concern rising coronavirus cases will hurt the global economy and as stimulus talks in Washington dragged on. US futures fluctuated.

Shares fell across the region with declines more modest than those seen in the US overnight, when the S&P 500 saw its biggest loss in a month. Ongoing spending talks in Washington continued to weigh on sentiment as prospects dimmed for fiscal aid before the presidential election.

Losses for energy and industrial companies sent the S&P 500 down 2.9 per cent at one point, though stocks pared losses in the afternoon amid recoveries for the biggest technology companies. Boeing, Lockheed Martin and Raytheon Technologies slid on China’s plan to sanction the companies over arms sales to Taiwan.

Korean stocks pared opening losses as traders digested stronger-than-expected economic data. Australian shares underperformed.

The dollar slipped and 10-year Treasury yields retreated below 0.8 per cent. Oil climbed and copper was little changed, while gold edged higher.

Surging coronavirus infections around the globe are worrying investors already cautious with the US election a week away and time running out to finish an aid package before then.

US infections have hit a record in recent days. Europe took a step closer to the strict rules imposed during the initial wave of the pandemic, with leaders struggling to regain control of the spread while confronting growing opposition to restrictions.

“Investors should stay patient while waiting for the election results to clarify,” Tai Hui, chief Asia market strategist at JPMorgan Asset Management, said. “The potential optimism around a deal could be dampened as we approach election day. The recent surge in infections in the US and Europe is also denting market sentiment.”

In Washington, house speaker Nancy Pelosi and treasury secretary Steven Mnuchin again attempted to reconcile differences on a virus relief package. Differences between the two sides “have narrowed,” but “the more it narrows, the more conditions come up on the other side,” White House economic adviser Larry Kudlow told reporters.

“The overwhelming consensus in the market is that while the economic recovery to date is impressive, it still needs help,” said David Donabedian, chief investment officer of CIBC Private Wealth Management. “It’s not ready to stand on its own, and so some fiscal support is necessary and does not really seem to be forthcoming before year-end.”

Elsewhere, Turkey’s lira weakened past 8 per dollar for the first time. The central bank rattled investors last week by unexpectedly keeping rates on hold, and geopolitical risks have sapped interest in Turkish assets.

Here are the major moves in markets:

Stocks

• S&P 500 futures rose 0.1 per cent as of 11:29 a.m. in Tokyo. The S&P 500 Index decreased 1.9 per cent.
• Topix index fell 0.4 per cent.
• Australia's S&P/ASX 200 Index dropped 1.8 per cent.
• South Korea's Kospi index was little changed.
• Hang Seng Index fell 0.6 per cent.
• Shanghai Composite Index fell 0.3 per cent.
• Euro Stoxx 50 futures fell 0.1 per cent.

Currencies

• The yen was up 0.1 per cent to 104.72 per dollar.
• The offshore yuan traded little changed at 6.6969 per dollar.
• The Bloomberg Dollar Spot Index dipped 0.1 per cent.
• The euro rose 0.1 per cent to $1.1824.
• The British pound was up 0.1 per cent to $1.3037.

Bonds

• The yield on 10-year Treasuries was steady at 0.80 per cent.
• Australia's 10-year bond yield held at 0.8 per cent.

Commodities

• West Texas Intermediate crude rose 0.5 per cent to $38.74 a barrel.
• Gold added 0.4 per cent to $1,909 an ounce.