Nikkei, Hang Seng sink around 2% as coronavirus cases spike in Europe
Asian stock markets followed Wall Street lower Wednesday after European governments extended anti-coronavirus lockdowns, clouding the outlook for economic recovery.
Japan’s Nikkei 225 NIK, -2.04% fell 1.8% and Hong Kong’s Hang Seng index HSI, -2.03% slid 2%. The Shanghai Composite SHCOMP, -1.30% declined 1.3%. South Korea’s Kospi 180721, -0.28% edged 0.3% lower, while Australia’s S&P/ASX 200 XJO, +0.50% inched 0.4% higher. Stocks fell in Singapore STI, +0.05%, Taiwan Y9999, -0.90% and Indonesia JAKIDX, -1.54%.
Overnight, Wall Street gave up most of the previous day’s gains as technology, industrial and bank stocks fell.
Investor confidence was shaken after Germany, Europe’s biggest economy, and the Netherlands extended lockdowns and imposed new travel and business curbs in response to spikes in infection.
The World Health Organization said the weekly global death toll from the virus is rising again following six weeks of declines. It said the number of new reported cases rose in four of six global regions.
“Investors were left scrambling for life jackets, as it seems we are back navigating the stormy sea of the coronavirus pandemic,” said Stephen Innes of Axi in a report.
In Europe, Germany extended anti-virus restrictions by three weeks to April 18 and said travelers arriving from abroad by air must be tested for the coronavirus before boarding their flight. The Netherlands extended its lockdown by three weeks.
That followed similar moves earlier by Italy and France.
Investors are wavering between optimism about coronavirus vaccines that might allow business and travel to return to normal and concern about the pace of recovery.
Traders also are watching the potential for inflation pressures to pick up after struggling economies were flooded with credit and government spending. That has depressed U.S. bond prices, prompting some to shift money out of stocks.
On Wall Street, the benchmark S&P 500 SPX, 0.32% fell 0.8% on Tuesday to 3,910.52. The Dow Jones Industrial Average DJIA, 0.81% fell 0.9% to 32,423.15. The Nasdaq COMP, -0.44%, dominated by tech stocks, sank 1.1% to 13,227.70.
In Washington, Treasury Secretary Janet Yellen and Federal Reserve Chair Jerome Powell told Congress more must be done to limit economic damage. Powell stressed that he does not expect stimulus programs to trigger inflation.
Bond yields, or the difference between the market price and the payout at maturity, narrowed as prices rose. The yield of the 10-year Treasury note fell to 1.63%, down from last week’s level above 1.70%.
That weighed on banks and other financial companies which look to yields as a benchmark for the interest rates they charge on mortgages and other loans. Bank of America fell 2.0% and Wells Fargo dropped 1.9%. American Express slid 2.8%.
In energy markets, benchmark U.S. crude CLK21, 3.39% lost 2 cents to $57.74 per barrel in electronic trading on the New York Mercantile Exchange.
The contract plunged $3.79 on Tuesday to $57.76 after Germany’s lockdown announcement triggered concern demand for industry and travel would decline.
Brent crude BRNK21, 3.26%, used to price international oils, shed 1 cent to $60.85 per barrel in London. It lost $3.83 the previous session to $60.79.
The dollar USDJPY, 0.31% declined to 108.52 yen from Tuesday’s 108.75 yen.