Asian markets were mixed Friday, with gainers supported by bargain-buying after the previous day’s sell-off, with investors growing increasingly concerned about new lockdown measures in Europe as a second wave of coronavirus takes hold, reports BSS/AFP.
Traders were also keeping tabs on developments in Washington as lawmakers struggle to find agreement on a new stimulus for the beleaguered US economy, with a disappointing jobs report highlighting the need for action. But analysts suggested that with Democrats and Joe Biden enjoying big opinion poll leads, expectations for a clean sweep of Congress and the White House in the November 3 elections is lending buoyancy to equities on hopes they will pass a much bigger rescue package.
All three main indexes on Wall Street finished in the red for a third day, hit by unsettling infection rates in the US and particularly in Europe that many fear could see the return of economically painful restrictions similar to those imposed earlier this year.
London faces more stringent restrictions as cases rise, while Paris and eight other French cities will be put under partial curfew for as long as six weeks.
Germany also ramped up measures, while the EU’s disease control agency labelled more than half of the bloc’s member states as red zones in a new map to guide countries’ decisions on travel restrictions.
“We need to take into account the tremendous rally we’ve had over the past five months so some consolidation is certainly warranted,” Jim McDonald, at Northern Trust, told Bloomberg TV.
“The new risk emerging on the horizon is the increasing cases of Covid that are sweeping across Europe and increasing across the US.”
Hong Kong led gains, jumping 0.9 percent after a drop of more than two percent on Thursday, while Shanghai, Tokyo, Taipei and Singapore were also in positive territory. However, Sydney, Seoul, Manila, Jakarta and Wellington were all down.
– ‘Go big or go home’ –
The slide back into containment measures has increased the need for further
government help, though the odds on anything being agreed in Washington
before the election are lengthening each day.
Adding to the gloom was a report Thursday showing new applications for
jobless benefits hit a seven-week high last week.
With polling showing him well behind in the White House race, Donald Trump
said he was open to a bigger stimulus than the $1.8 trillion offered last
week.
“I would,” he told Fox Business when asked if he would hike his proposal.
“Absolutely, I would. I would say more. I would go higher. Go big or go home,
I said it yesterday.”
However, while the president is willing to move towards the Democrats’ $2.2
trillion plan, House Speaker Nancy Pelosi was not happy with the detail and
Republican Senate Majority Leader Mitch McConnell said he was unwilling to
agree to such big spending.
And Treasury Secretary Steven Mnuchin said a deal is unlikely before the
election.
“Of course, the markets’ 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,” said Axi’s Stephen
Innes.
Key issues, he said, included “Brexit, the US election, and perhaps the
most horrifying troubles of all, the second wave of the coronavirus” that
could lead to more lockdowns.
However, he added that the eventual passage of a new deal would likely fuel
a surge on markets.
The first stimulus passed earlier this year, combined with huge central
bank support, has been credited with helping to send equities soaring from
their March troughs.
– Key figures around 0230 GMT –
Tokyo – Nikkei 225: UP 0.1 percent at 23,523.37 (break)
Hong Kong – Hang Seng: UP 0.9 percent at 24,372.12
Shanghai – Composite: UP 0.2 percent at 3,338.36
Euro/dollar: UP at $1.1705 from $1.1702 at 2015 GMT
Pound/dollar: DOWN at $1.2887 from $1.2896
Dollar/yen: DOWN at 105.26 yen from 105.42 yen
Euro/pound: UP at 90.82 pence from 90.73 pence
West Texas Intermediate: DOWN 0.5 percent at $40.74 per barrel
Brent North Sea crude: DOWN 0.6 percent at $42.89
New York – Dow Jones: DOWN 0.1 percent at 28,494.20 (close)
London – FTSE 100: DOWN 1.7 percent at 5,832.52 (close)