Stocks across Asia fell on new concerns over the impact of the coronavirus pandemic in the region, despite signs that other parts of the global economy are preparing to ease lockdowns.
On Tuesday Hong Kong’s benchmark Hang Seng index fell 1.8 per cent while Japan’s Topix index slipped 0.3 per cent. China’s benchmark CSI 300 shed 0.5 per cent after data showed producer prices fell at the fastest pace in four years in April as virus-weakened global demand hit the country’s industrial economy.
South Korea’s Kospi index dropped 0.7 per cent after authorities reported a cluster of new Covid-19 infections tied to an outbreak in Seoul’s nightlife district. That has raised concerns of a second round of infections in the country.
Fears have emerged over a possible second wave of infections in parts of Asia, with Wuhan — the origin of the virus in China — this week reporting its first cluster of new infections since relaxing quarantine measures.
Australia’s S&P/ASX 200 slipped 1.2 per cent after China suspended imports of red meat from four abattoirs in the country, in a move that comes against a backdrop of souring diplomatic relations between the nations.
The declines in Asia came despite an eleventh-hour rebound on Wall Street after the governor of New York said parts of the state were ready to reopen and that others were “very close” behind. That fuelled investor hopes of a gradual return to normal life in the state, which has been the centre of the coronavirus outbreak in the US.
The S&P 500 ended flat overnight after erasing earlier losses of nearly 1 per cent.
Futures markets suggested a weak day for European and US equity markets. The S&P 500 was tipped to open 0.7 per cent lower on Tuesday while the FTSE 100 was set to drop 0.2 per cent.
Stock markets have rallied in recent weeks on optimism that the global economy will make a V-shaped recovery once policymakers manage to contain the pandemic. However, some investors believe markets will struggle to mount further gains.
“There’s no such thing as a bear market without a bear market rally” said Eoin Murray, head of investment at Federated Hermes International. “Despite the recent gains made by US large-caps, we think it’s likely a stretch for investors to chase the move much higher from here.”
Oil prices were slightly higher a day after Saudi Arabia said it would reduce output by another 1m barrels a day next month in a bid to put a floor under prices.
Brent crude, the international benchmark, was up 0.2 per cent at $29.69 a barrel but slightly below the important $30 threshold breached last week. West Texas Intermediate, the US marker, rose 0.8 per cent to $24.33.