NEW YORK, June 12 ― Asian equities are set to fall sharply today after Wall Street stocks and oil tumbled over growing concerns that a resurgence of coronavirus infections could stunt the pace of reopening economies.
The three major US stock indexes fell more than 5 per cent, posting their worst day since mid-March, when markets were sent into freefall by the abrupt economic lockdowns put in place to contain the pandemic.
“All of a sudden the coronavirus, which has been an also-ran story for some days now, became more important as the virus began picking up in some states, and the market began thinking there may be delays to reopening,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.
Australian S&P/ASX 200 futures were down 3.04 per cent at 20:59 GMT, while Japan's Nikkei 225 index closed down 2.82 per cent at 22,472.91 yesterday. Hong Kong's Hang Seng index futures were down 2.06 per cent.
Cases of the disease have jumped in several US states in recent days, raising concern among experts who say authorities have loosened restrictions put in place to contain the spread too early.
Cases in New Mexico, Utah and Arizona rose by 40 per cent for the week ended Sunday, a Reuters tally shows. Florida and Arkansas are other hot spots.
The US Federal Reserve released a gloomy economic outlook at the end of its two-day monetary policy meeting on Wednesday. Chair Jerome Powell warned of a “long road” to recovery.
Economic data appeared to back up the Fed's projections, with jobless claims still more than double their peak during the Great Recession and continuing claims at an astoundingly high 20.9 million.
On Wall Street, the Dow Jones Industrial Average dropped 6.9 per cent, the S&P 500 lost 5.89 per cent, while the Nasdaq Composite shed 5.27 per cent.
Oil prices tumbled on renewed concerns about demand, as new cases of the coronavirus disease rise globally, and a large buildup of US crude inventories.
Benchmark Brent crude futures settled 7.62 per cent lower at US$38.55 a barrel in US trading hours, before sliding further in Asia today. US crude oil futures settled at US$36.34 a barrel, down US$3.26, or 8.23 per cent.
US Treasury and euro zone government bonds rallied after the Fed on Wednesday signaled it plans years of extraordinary support to counter the economic fallout from the pandemic.
Yields on 10-year Treasury notes dropped sharply from last week's peak of 0.96 per cent.
The 10-year Treasury note fell 8.6 basis points to yield 0.6625 per cent, while Germany's 10-year benchmark fell 10 basis points to a nine-day low of -0.43 per cent.
Gold futures settled more than 1 per cent higher and the dollar, yen and Swiss franc all benefited from safe-haven flows.
The yen rose to a one-month high against the dollar, while the Swiss franc climbed to a three-month peak. The dollar also rose 0.4 per cent to 96.556 against a basket of currencies.
The euro fell 0.63 per cent to US$1.1297, and the yen slid 0.22 per cent to US$106.8500.
US gold futures settled up 1.1 per cent at US$1,739.80 an ounce. ― Reuters
