Asia markets take fresh hit as virus surge trumps vaccine hope

A general view shows the Chiaia district (Front), the Castel dell’Ovo fortress (Rear R) and the gulf of Naples on November 12, 2020 amid a surge of COVID-19 cases overwhelming hospitals. – The Italian government imposed tighter restrictions on another five regions on November 10 as it tries to stem escalating new cases of coronavirus, while still resisting a nationwide lockdown. (Photo by Filippo MONTEFORTE / AFP)


HONG KONG, China (AFP) — A spike in coronavirus infections across the United States and Europe hit Asian markets again Friday as traders fear another wave of lockdown measures will throw an already shaky economic recovery off course.

The rally fuelled by excitement over a possible vaccine before 2021 and relief at Joe Biden’s US election win has given way to the reality that while there is light at the end of the tunnel, the killer disease remains rampant.

Several European economies including England and France have already been all but shut down to contain a fresh eruption, but they continue to record frighteningly high numbers of new cases — raising the possibility the measures could be extended.

And major US cities including New York and Chicago are being forced to act as leaders worry that the northern hemisphere winter will be more deadly than spring.

This all means economies that had started to see signs of life after a searingly bad first half of the year could stumble again, with some observers indicating the world will see a so-called W-shaped recovery.

Top US health adviser Anthony Fauci said while he was confident vaccines would bring an end to the pandemic, it was crucial that people “hang on and continue to double down on the public health measures”.

Director of the National Institute of Allergy and Infectious Diseases, Anthony Fauci, testifies during a US Senate Senate Health, Education, Labor, and Pensions Committee hearing to examine Covid-19, focusing on an update on the federal response in Washington, DC, on September 23, 2020. (Photo by Graeme JENNINGS / POOL / AFP)

All three main indexes on Wall Street finished in the red, though the Nasdaq fared slightly better as tech firms benefit from bets on people using gadgets while stuck at home.

Those losses seeped into Asia, where profit-taking also played a role after a week-long rally.

Tokyo, Sydney, Singapore, Manila and Mumbai were all in the red, though there were gains in Seoul, Taipei, Wellington and Jakarta.

(File photo) This photo taken on January 29, 2019 shows a general view of the skyline of the financial district of Makati in Manila. (Photo by Ted ALJIBE / AFP)
(File photo) An electric-rickshaw transports passengers along a street in the old quarters of New Delhi on September 15, 2020. – Coronavirus-ravaged economies across the Asia Pacific will make a “swoosh-shaped” recovery next year, the Asian Development Bank forecast on September 15, but it warned that further restrictions to combat the contagion could derail the region’s return to growth. (Photo by Jewel SAMAD / AFP)

“Despite some truly remarkable news on the healthcare and vaccine front this week, which saw investors cheer it to the rafters… investors could not shake the sentiment-crushing aspects of the continually soaring Covid-19 cases and the unpleasantries of new economic restrictions,” said Axi strategist Stephen Innes.

– ‘Winter of discontent’ –
“It feels a bit deflated today as investors look to hunker down for what is bound to be a winter of discontent. The vaccine cannot get here quick enough as what should be a festive time of the year looks bound to be weeks of holiday gloom,” he added.

Hong Kong and Shanghai were also hit by news that Donald Trump had signed an order banning Americans from investing in Chinese firms that could help the country’s military and security apparatus.

The executive order, due to take effect on January 11, said Beijing obliges private firms to support these activities and through capital markets “exploits United States investors to finance the development and modernization of its military”.

The prohibition targets a list of 31 companies, including telecoms, aerospace and construction firms, according to reports. Among the firms on the list China Mobile plunged five percent in Hong Kong while China Telecom Corp dived almost eight percent.

Adding to the downbeat mood on trading floors are concerns that a new US stimulus is unlikely to be passed before Biden moves into the White House.

With Donald Trump continuing to reject defeat and concede, reports said he has stepped back from talks on a new round of spending for the beleaguered economy.

“This means that stimulus hopes now depend on the ability of Senate Majority Leader Mitch McConnell and House Speaker Nancy Pelosi finding common ground,” said National Australia Bank’s Rodrigo Catril.

“But, notwithstanding the prospect of the US economic recovery losing momentum as tougher social restrictions are introduced, hopes of a big stimulus don’t look great.”

In early trade, London, Paris and Frankfurt all fell.

– Key figures around 0820 GMT –
Tokyo – Nikkei 225: DOWN 0.5 percent at 25,385.87 (close)

Hong Kong – Hang Seng: DOWN 0.1 percent at 26,156.86 (close)

Shanghai – Composite: DOWN 0.9 percent at 3,310.10 (close)

London – FTSE 100: DOWN 0.7 percent at 6,292.91

Euro/dollar: UP at $1.1813 from $1.1807 at 2230 GMT

Pound/dollar: UP at $1.3145 from $1.3118

Dollar/yen: DOWN at 105.02 yen from 105.10 yen

Euro/pound: DOWN at 89.87 pence from 89.96 pence

West Texas Intermediate: DOWN 1.5 percent at $40.50 per barrel

Brent North Sea crude: DOWN 1.1 percent at $43.05 per barrel

New York – Dow: DOWN 1.1 percent to 29,080.17 (close)

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