Asian markets tumble as infection rates jump

Reimposition of lockdowns in parts of the world adds to investors’ concerns

HONG KONG:

Asian markets sank on Friday as rising virus infection rates across the world put the brakes on the latest rally.

Equities have shown a healthy resilience to the rapid spread of the disease around the world, with hopes for the economic recovery, the easing of lockdowns and government largesse providing crucial support.

But several days of figures showing a record number of new cases in populous US states including Florida, Texas and California - leading to the reimposition of containment measures - were beginning to sink in.

A lockdown in Australia’s second-biggest city Melbourne and the sprouting of new clusters in Hong Kong, which had gone weeks without any new cases, added to the worry.

Analysts also pointed out that while global markets have enjoyed healthy gains, those have mostly come due to traders moving into tech firms, which are more likely to benefit from further lockdowns.

This is reflected in the tech-heavy Nasdaq index on Wall Street hitting multiple record highs over the past week, including Thursday. The Dow fell more than one per cent and the S&P 500 also dropped, with traders unmoved by data showing the number of US workers filing for unemployment benefits last week fell by 99,000.

Analysts warned the figure remained high and the latest re-closures in some states could lead to fresh layoffs.

Asia tracked the New York losses, with profit-taking also playing a part after a broadly strong week.

Hong Kong dived 1.8% as a fresh outbreak in the city prompted authorities to reimpose measures including the closure of schools.

Tokyo ended 1.1% down and Shanghai, which has been surging over the past week, lost two per cent with Bloomberg News reporting that state-backed funds were easing back on their investments to put a brake on the rally.

Sydney slipped 0.6% and Seoul shed 0.8% while Taipei dropped one per cent, with losses also seen in Wellington, Mumbai, Jakarta and Manila. London, Paris and Frankfurt all fell in early trade.

“Optimism is giving way to de-risking into the weekend as there is no way to sugar-coat, let alone the Fed papering over (with a financial back-stop), the new daily Covid-19 cases,” said Stephen Innes at AxiCorp.

Published in The Express Tribune, July 11^th, 2020.

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