Asian markets track US, Europe rout as Covid-19 restrictions return

Hong Kong slipped 0.6 per cent and Shanghai shed 0.5 per cent, while Sydney dropped 0.9 per cent. Seoul, Manila and Jakarta all fell more than one per cent. — Reuters pic
Hong Kong slipped 0.6 per cent and Shanghai shed 0.5 per cent, while Sydney dropped 0.9 per cent. Seoul, Manila and Jakarta all fell more than one per cent. — Reuters pic

HONG KONG, Sept 22 ― Asian markets extended the previous day's losses following another rout in New York and Europe as governments impose new containment measures as they struggle to fight off a second wave of virus infections.

Dimming hopes for a new US stimulus added to the downbeat mood with Capitol Hill hostilities stoked by the death of US Supreme Court Justice Ruth Bader Ginsburg, while a top White House adviser questioned whether more fiscal help was even needed.

After months of economic recovery helped by an improvement in infection and death rates, there is a worry that the coming northern hemisphere winter ― which experts say could help the disease spread ― will see a return to the strict stay-at-home rules.

With new spikes around the world, authorities are being forced to act, while former Food and Drug Administration commissioner Scott Gottlieb warned the US may experience “at least one more cycle” of the virus in autumn and winter.

Madrid has already put 850,000 residents in lockdown, while under new rules to come into force on Thursday, English pubs, bars and other hospitality venues will be required to close at 10pm while food and drink outlets will be restricted to table service only.

Similar restrictions are already in place across swathes of northern and central England. Scotland, Wales and Northern Ireland are expected to unveil their own nationwide rules imminently.

While nationwide lockdowns ― which devastated economies globally this year ― have not yet been imposed, the prospect of financially damaging measures being put in place has spooked investors.

London's FTSE 100 and the CAC 40 in Paris tumbled more than three per cent, while the Frankfurt DAX tanked more than four per cent.

Wall Street also tumbled, though all three main indexes managed to end off their lows thanks to bargain-buying.

Stimulus worries

The selling continued into Asia but the losses were shallower.

Hong Kong slipped 0.6 per cent and Shanghai shed 0.5 per cent, while Sydney dropped 0.9 per cent. Seoul, Manila and Jakarta all fell more than one per cent.

Taipei and Singapore were also down.

Traders are becoming less optimistic US lawmakers will manage to hammer out a new rescue package for the beleaguered economy, with Democrat-Republican antipathy stirred by the death of Ginsburg.

Donald Trump and Republicans are keen to nominate a new judge before the November 3 election but Democrats are pushing back against that, and analysts said the hostilities will make any stimulus agreement less likely.

Meanwhile, Trump economic adviser Larry Kudlow said that the country is seeing a “self-sustaining, strong” recovery, and while a new spending Bill “has some elements that could help” it may not be needed after all.

“I do not think the recovery is contingent on that assistance package,” he added.

Macro Risk Advisors founder and CEO Dean Curnutt warned markets were likely to struggle for some time as uncertainty reigns.

“Valuations were getting more and more stretched and folks were looking the other way in the context of undeniable Fed support and the view that the US government was going to top off the loss of income during the pandemic,” he told Bloomberg TV.

“There is concern that this uncertainty around the election is going to stay with us for a period after the election.”

Key figures around 0240 GMT

Hong Kong ― Hang Seng: DOWN 0.6 per cent at 23,801.32

Shanghai ― Composite: DOWN 0.5 per cent at 3,299.80

Tokyo ― Nikkei 225: Closed for a holiday

Euro/dollar: DOWN at US$1.1763 (RM4.8644) from US$1.1777 at 2130 GMT

Pound/dollar: DOWN at US$1.2815 from US$1.2817

Euro/pound: DOWN at 91.78 pence from 91.85 pence

Dollar/yen: DOWN at ¥104.53 from ¥104.66

West Texas Intermediate: UP 0.7 per cent at US$39.57 per barrel

Brent North Sea crude: UP 0.4 per cent at US$41.59 per barrel

New York ― Dow Jones: DOWN 1.8 per cent at 27,147.70 (close)

London ― FTSE 100: DOWN 3.4 per cent at 5,804.29 (close) ― AFP

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