SYDNEY, Oct 16 — Asian stocks came under pressure today as investors sought safe havens, such as the US dollar, fearing that a resurgence in coronavirus cases and a lack of additional US fiscal stimulus would hobble the world economy.
US President Donald Trump’s offer yesterday to raise the size of a fiscal stimulus package to win the support of Republicans and Democrats helped narrow Wall Street losses, though many investors still believe a deal is unlikely before the November 3 election.
“There’s a bit of worry there and also at what we’re seeing in America and in Europe regarding the virus and how it seems to be taking hold pretty significantly again,” said Grant Williamson, investment adviser at Hamilton Hindin Greene in Christchurch, New Zealand.
Stocks struggled to make gains in early Asian trade with Australia’s S&P/ASX 200 down 0.02 per cent and Japan’s Nikkei 225 futures adding just 0.06 per cent. Hong Kong’s Hang Seng index futures rose 0.36 per cent. E-mini futures for the S&P 500 rose 0.04 per cent.
Australia and New Zealand investors were likely to “take a breather” today, especially after New Zealand equities climbed 6 per cent during October, Williamson said.
On Wall Street, the Dow Jones Industrial Average fell 0.07 per cent, the S&P 500 0.15 per cent and the Nasdaq Composite dropped 0.47 per cent.
An unexpected rise in US weekly jobless claims figures added to worries about a sputtering world economy, especially in the face of a spike in Covid-19 cases in Europe.
Safe-haven demand due to signs of a stalling US economy drove the dollar index 0.398 per cent higher after touching a two-week high of 93.91, while the Japanese yen strengthened 0.08 per cent versus the greenback at 105.38 per dollar.
MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.04 per cent lower.
The euro was down 0.01 per cent to US$1.1705, while a firmer US dollar dragged on sterling, which was last trading at US$1.2902, down 0.09 per cent on the day.
Spot gold was little changed at US$1,908.07 an ounce.
Focus in Asia swings to Canada-China relations after Canada ordered a national security review of Shandong Gold Mining Co Ltd’s bid to acquire a gold mine in the Canadian Arctic. It is the latest sign of pushback faced by China’s state miners.
In Europe, London will enter a tighter Covid-19 lockdown from midnight today as Prime Minister Boris Johnson seeks to tackle a swiftly accelerating second coronavirus wave.
“The market’s on again off again love affair with an impending stimulus torrent masks the fact that investor uncertainty is bristling ahead of an expected choppy period in terms of headline risk, including Brexit, the US election, and perhaps the most horrifying troubles of all, the second wave of the coronavirus that could trigger more intense lockdown worries,” said Stephen Innes, global chief market strategist at AxiCorp.
Brexit talks continued as The European Union put the onus on Britain yesterday to compromise on their new economic partnership or stand ready for trade disruptions in less than 80 days.
Britain’s Brexit negotiator, David Frost, said on Twitter he was “disappointed.”
The Australian dollar fell 0.06 per cent versus the greenback at US$0.709. Oil prices were weighed by concerns about the coronavirus and its impact on the world economy. Brent crude futures dropped 16 cents to settle at US$43.16 a barrel, while US West Texas Intermediate crude futures slipped 8 cents to settle at US$40.96 a barrel.
Traders’ preference for safety helped government bonds. The yield on US Treasuries Benchmark 10-year notes was last 0.7306 per cent from 0.734 per cent. — Reuters
