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Asia stocks drift after US retreat; bonds steady
Equities fell in South Korea and Hong Kong, and were little changed elsewhere. Japanese shares pared losses as Prime Minister Yoshihide Suga unveiled around $380 billion in fiscal measures to help the economy recover from the pandemic.
Asian stocks drifted Tuesday as swelling coronavirus infections across the US weighed on risk assets overnight. Treasuries held on to Monday’s gains.
Equities fell in South Korea and Hong Kong, and were little changed elsewhere. Japanese shares pared losses as Prime Minister Yoshihide Suga unveiled around $380 billion in fiscal measures to help the economy recover from the pandemic. S&P 500 futures dipped after the benchmark dropped from an all-time high amid fears of restrictions as infections climb. Earlier, the Nasdaq 100 closed higher for a ninth straight day, its longest winning streak in almost a year.
Elsewhere, the pound pared overnight losses as the UK backed down from a threat to break the Brexit agreement. The dollar held gains against its major peers. Oil slipped and gold was steady after jumping more than 1% Monday.
As coronavirus cases surge, markets are increasingly looking for a US stimulus deal to be done, especially after last week’s disappointing jobless data. With Republican and Democratic negotiators struggling to reach an agreement on both a mammoth government spending bill and Covid-19 relief, lawmakers are set to postpone what had been a Friday night deadline for passing a bill.
Meanwhile, the US announced sanctions Monday against 14 members of China’s National People’s Congress, the country’s rubber-stamp legislature, as the Trump administration tries to ratchet up pressure on Beijing over its crackdown on dissent in Hong Kong.
“Signs that traders have trimmed risk are there, with some focus on US Covid trends,” Chris Weston, head of research at Pepperstone Group Ltd., wrote in a note. Renewed focus on trade tensions and the ongoing Brexit negotiations, suggests “this selective mindset is just the market sitting on its hands waiting for the next shoe to drop.”
UK Prime Minister Boris Johnson is prepared to back down on his threat to break international law by unilaterally ripping up parts of the Brexit divorce deal he signed with the European Union, the government announced Monday. Johnson will travel to Brussels for crisis talks with European Commission President Ursula von der Leyen as they try to break the deadlocked negotiations over a post-Brexit trade deal.
