Asian stocks fall as new Covid cases rise By Reuters

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© Reuters. FILE PHOTO: A worker at the Tokyo Stock Exchange (TSE) is seen at an empty trading floor in Tokyo, Japan, on October 1, 2020. REUTERS/Issei Kato

Written by Andrew Galbraith

SHANGHAI (Reuters) – Asian stocks tumbled on Wednesday, giving up early gains, while the dollar was strong as investors worried that the fast-spreading coronavirus could hamper a global economic recovery.

But European stock markets were poised to open slightly higher after sharp declines early in the week, ahead of Thursday’s European Central Bank meeting which is expected to carry a dovish tone.

It rose by 0.16% and the German by 0.07%. Futures added 0.08%.

The delta variable of the coronavirus has now replaced inflation as a major source of investor concern, with South Korea on Wednesday reporting a record daily new infections.

Last week, data showing US consumer prices rose in June raised concerns that the Federal Reserve could put a quicker end to emergency stimulus measures.

The shift from arguing over whether price hikes are temporary to outright fear of the impact of the recent COVID-19 surge sent US 10-year yields down more than 20 basis points in a week as investors moved to safety. sanctuary assets. The price fell nearly 4% from last Wednesday’s highs to Monday’s lows before rebounding.

On Wednesday, MSCI’s broadest index of Asia-Pacific shares outside Japan reversed early gains to fall 0.14%, extending the week’s losses to more than 2%.

Interest rates fell in Seoul by 0.29% and Hong Kong by 0.46%.

It rose 0.6% after touching a six-month low the day before, as investors bought cyclical stocks ahead of a long weekend that will herald the start of the 2020 Tokyo Olympics and with a jump in exports in June boosted hopes of an export-led economy recovery.

Leading Chinese stocks were also higher, rising 0.81%.

“The level of volumes and the level of choppy price action I think tells you there’s not a lot of conviction one way or the other,” said Kay Van-Petersen, global macroeconomic analyst at Saxo Capital Markets in Singapore.

But while he said the peak of global growth has likely passed, easy central bank policies continue to provide strong support to global asset prices even as they begin to signal diminishing asset purchases.

“G4 central bank balance sheets are piling up 15% since 2008. My view is that it won’t stop. They won’t close.”

US Treasuries are down, with the 10-year yield rising to 1.2151% from the previous day’s close of 1.209%. The two-year yield was 0.2037%, up from a close of 0.194%.

But echoing concern in stock markets about a surge in global COVID-19 infections, the dollar remained near three-month highs on Wednesday.

“While some of the world are ignoring rising infection rates as vaccination rates limit the severity of any symptoms of new cases, there are few parts of the world that can completely ignore this,” said Rob Carnell, chief economist for Asia and the Pacific at ING.

The latest rise was 0.08% at 93.041, with the euro down 0.07% to $1.1771. The dollar was 0.05% stronger against the yen at 109.89.

Oil prices resumed their decline after a rebound on Tuesday, as an industry report showed an unexpected increase in US oil inventories. [O/R]

US West Texas Intermediate crude was down 0.46% to $66.89 a barrel and was trading at $69.06 a barrel, down 0.42% on the day.

It fell 0.07% to $1,808.84 an ounce as US yields rebounded.

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