Stocks drop as Covid-19 cases overshadow vaccine rollout hopes

A woman wearing a kimono walks past an electronic board showing the Nikkei stock index outside a brokerage in Tokyo May 14, 2019. — Reuters pic
A woman wearing a kimono walks past an electronic board showing the Nikkei stock index outside a brokerage in Tokyo May 14, 2019. — Reuters pic

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HONG KONG, Nov 30 — Equity markets fell today as hopes that vaccines will soon be rolled out were overshadowed by concerns over a pick-up in virus cases around the world.

Oil prices were also under pressure ahead of a two-day meeting of major producers, with traders worried that they had still not agreed on an extension of the output cuts that have provided crucial support for most of the year.

World markets have surged this month thanks to breakthroughs on vaccines, while investors have also been cheered by Joe Biden’s US presidential election win and signs that incumbent Donald Trump will allow a smooth transfer, despite claims of voter fraud.

With at least three vaccines in the pipeline and approval in some countries said to be just weeks away, there is a general feeling of optimism on trading floors as dealers forecast an economic rebound next year.

“Vaccines offer the promise that the major disruptions of the pandemic will fade from the scene in 2021,” said Axi strategist Stephen Innes. “Economic life will gradually heal; the world will start to move on from all the human suffering that the virus has wrought.”

Indications that a surge in new infections in Europe looks to be slowing were also providing some hope, while Britain and France are preparing to ease some of their lockdown restrictions.

But Trump’s top infectious diseases expert warned of a fresh jump in cases in the coming weeks after millions of Americans ignored scientific advice and travelled around the country for Thanksgiving.

“There almost certainly is going to be an uptick because of what has happened with the travel,” Anthony Fauci told CNN’s State of the Union. “We may see a surge upon a surge” in two or three weeks, he said, adding that Christmas would probably bring more travel and family gatherings.

Parts of Asia are also seeing new spikes, with Hong Kong leaders warning the city is entering a fourth wave, while containment measures have been introduced in South Korea and Japan.

Markets in Asia dropped at the start of the week. Hong Kong led losses, shedding 2.1 per cent, while Singapore, Seoul, Taipei and Bangkok were also more than one per cent lower while Jakarta fell three per cent.

Focus on Opec meeting

Shanghai was unable to maintain an early rally despite data showing Chinese factory activity increased more than expected to a three-year high this month. Tokyo also fell, though Wellington added one per cent.

London, Paris and Frankfurt all fell at the open.

“If there is an absence of positive news from the pharma sector we might see stocks drift lower but even if we do, we probably won’t see aggressive selling for fear there will be further breakthroughs on the vaccine front,” said CMC Markets analyst David Madden.

Oil traders are keenly awaiting a meeting of Opec and other major producers that starts Monday, hoping they agree to continue their output cuts for another few months as the global economy stutters.

However, observers said there was concern that so far there had been no sign they would do so.

“With no definitive pre-meeting guidance to the pilot markets, caution is warranted ahead of the meeting’s conclusion,” Innes said.

“The recent oil-price rally may have reduced Opec’s sense of urgency. An extension still seems the most likely outcome, but risk/reward is skewed to the downside as oil is unlikely to move up meaningfully... if an extension is announced.”

The pound rose as Britain and the European Union try to hammer out a post-Brexit trade deal, with just weeks to go before the end of the transition period. There are concerns that failure to reach an agreement will deal a heavy blow to both economies.

However, while the two sides remain locked in dispute over two issues — fishing rights and fair trade rules — there is hope they will eventually get over the line as long as each makes concessions.

British foreign minister Dominic Raab told Sky’s Sophy Ridge On Sunday that this could be the final week of “substantive” talks, with time running out to agree and ratify a deal. “There’s a deal to be done,” he said.

Key figures around 0820 GMT 

Tokyo — Nikkei 225: DOWN 0.8 per cent at 26,433.62 (close)

Hong Kong — Hang Seng: DOWN 2.1 per cent at 26,341.49 (close)

Shanghai — Composite: DOWN 0.5 per cent at 3,391.76 (close)

London — FTSE 100: DOWN 0.4 per cent at 6,343.46

Euro/dollar: UP at US$1.1967 from US$1.1959 at 1945 GMT on Friday

Pound/dollar: UP at US$1.3347 from US$1.3304

Dollar/yen: DOWN at 103.97 yen from 104.03 yen

Euro/pound: DOWN at 89.66 pence from 89.88 pence

West Texas Intermediate: DOWN 1.7 per cent at US$44.75 per barrel

Brent North Sea crude: DOWN 2.1 per cent at US$47.17 per barrel

New York — Dow: UP 0.1 per cent at 29,910.37 (close) — AFP

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