Asian stocks under pressure after spike in coronavirus cases

NEW YORK: Asian stocks were expected to come under pressure on Wednesday, as a spike in new coronavirus infections weighed on sentiment, although U.S. assurances that the China trade deal was intact and upbeat economic data provided some reasons for optimism.

Kyle Rodda, market analyst at IG Markets, said late selling seen in Wall Street suggested a “soggy start” for Asian markets.

“We expect something of a positive start for Asian trade, but we will have overhanging concern about the virus itself and a second wave unfolding,” said Kyle Rodda, market analyst at IG Markets. “The market is clinging on to a recovery as much as it can.”

Australian S&P/ASX 200 futures rose 0.15% in early trading.

Japan’s Nikkei 225 futures fell 0.02%. Hong Kong’s Hang Seng index futures lost 0.01%.

On Wall Street, the Dow Jones Industrial Average ended 0.5% higher, the S&P 500 gained 0.43% and the Nasdaq Composite added 0.74%.

However, the three major indexes pared gains from highs of more than 1% earlier in the session on Tuesday.

Coronavirus cases in the U.S. surged 25% in the week ended June 21 compared from the week before, according to a Reuters analysis.

U.S. states including Texas and Arizona set records in their outbreaks. The European Union is prepared to bar U.S. travellers because of the surge of cases in the country, putting it in the same category as Brazil and Russia, the New York Times reported on Tuesday.

“For now markets are having trouble with the implications given the high bar to re-imposing restrictions,” according to a research note from the National Australia Bank.

Remarks from U.S. Treasury Secretary Steven Mnuchin helped boost the mood on Wall Street. He said the next U.S. stimulus bill will focus on getting people back to work quickly and that he would consider a further delay of the tax filing deadline.

MSCI’s gauge of stocks across the globe gained 0.90%.

The euro jumped to one week highs after positive economic data on Tuesday, and other high-risk currencies strengthened.

The dollar index fell 0.228%, with the euro up 0.01% to $1.1307.

Oil prices pulled back after hitting their highest since early March, on expectations that U.S inventories will hit a record high for a third week in a row.

U.S. crude recently fell 0.89% to $40.01 per barrel and Brent was flat on the day.