HONG KONG, Oct 30, 2020 (BSS/AFP) – Asian markets suffered further losses
Friday as investors were spooked by soaring virus cases in Europe and the
United States that have forced fresh lockdowns, while uncertainty ahead of
next week’s US election was also dampening sentiment.
Regional traders brushed off a healthy rebound on Wall Street and forecast-
beating economic growth data out of Washington with analysts warning the
fresh infection spikes and failure to pass a new stimulus would likely knock
the recovery off track.
Equities have had a torrid week as governments are forced to act to contain
a second wave of disease in the northern hemisphere, with France essentially
shutting down for November, Germany putting in place tough measures and
several other countries in danger of having to follow suit.
European Central Bank boss Christine Lagarde noted the eurozone was facing
a tough few months, saying Thursday that the economy was “losing momentum
more rapidly than expected” after a partial rebound in the summer, adding
that risks were “clearly tilted to the downside”.
However, on a positive note she hinted that the bank could unveil fresh
measures to keep credit flowing.
Eyes are now on Tuesday’s presidential election, with expectations Joe
Biden will win the White House, while Democrats could sweep both houses of
Congress, which observers say could see the passage of a huge new stimulus.
However, despite Biden being well ahead of Donald Trump in national and
battleground polls, traders remain nervous that the president could contest
any tight result, having spent much of the campaign warning of mail-in voter
fraud.
“There is going to be more volatility ahead of the election,” Quincy
Krosby, of Prudential Financial, told Bloomberg TV.
“Over the weekend folks are going to be focused on (key battleground state)
Pennsylvania to see whether or not Biden is gaining there. The concern is if
he gains a little bit, that may be one where you could actually look to a
contested election,” she added.
– US economy’s false dawn? –
Trump on Thursday claimed a triumph with data showing the world’s top
economy expanded a record 33.1 percent in the third quarter, warning in a
tweet that Biden would ruin the recovery.
However, analysts pointed out that the figure came after a 31.4 percent
drop in the previous three months and was driven by consumer spending
supported by a massive $3 trillion in government aid, much of which has since
expired.
“Even with the sharp rebound seen in the third quarter, the level of GDP
remains 3.5 percent below pre-pandemic levels with a large degree of spare
capacity remaining,” said National Australia Bank’s Tapas Strickland.
“Higher-frequency data also suggests that growth has slowed over recent
months, not helped by the resurgence of Covid-19.”
Separate figures showed new applications for jobless benefits fell last
week but remained at a mind-boggling 751,000.
Asian markets extended the week’s losses, with tech firms weighed by
warnings from US giants including Apple, Amazon and Facebook that the outlook
was murky owing to the impact of the coronavirus.
Tokyo was down 0.8 percent and Seoul shed one percent, while Hong Kong,
Shanghai, Taipei, Sydney, Singapore and Wellington also suffered losses.
However, OANDA’s Edward Moya offered a note of hope, saying that while the
virus is resurgent, “the world is better prepared to (deal with) Covid-19
over the winter months and hopes are still high that treatments and vaccines
will get approvals before year end”.
Oil prices climbed in early trade following another hefty loss Thursday
that sent the commodity to four-month lows, though observers warned that the
imposition of new lockdowns and containment measures would keep gains limited
and likely spark further selling.
– Key figures around 0230 GMT –
Tokyo – Nikkei 225: DOWN 0.8 percent at 23,146.37 (break)
Hong Kong – Hang Seng: DOWN 0.4 percent at 24,498.27
Shanghai – Composite: DOWN 0.1 percent at 3,271.15
Euro/dollar: UP at $1.1688 from $1.1672 at 2100 GMT
Dollar/yen: DOWN 104.46 yen from 104.60 yen
Pound/dollar: UP at $1.2936 from $1.2926
Euro/pound: UP at 90.35 pence from 90.34 pence
West Texas Intermediate: UP 1.0 percent at $36.54 per barrel
Brent North Sea crude: UP 1.2 percent at $38.10 per barrel
New York – Dow: UP 0.5 percent at 26,659.11 (close)
London – FTSE 100: FLAT at 5,581.75 (close)