Asian markets struggle as traders await crucial US stimulus

HONG KONG: Asian stocks drifted Tuesday with traders struggling to build on the previous day's broad advance and a record lead from Wall Street, with confidence kept in check by ongoing China-US tensions and lack of movement on a new US stimulus.

Technology firms continued to lead a rally in New York, sending the Nasdaq to yet another all-time high, while the S&P 500 closed just short of a record finish as frustrated investors wait for Democrats and Republicans to hammer out a much-needed financial support package.

With lawmakers now in recess and both parties' conventions taking place over the next two weeks, observers warn the chances of anything being agreed any time soon are slim.

The two are also at loggerheads over funding for the US Postal Service, which is expected to see an exceptional number of mail-in ballots in November's election, with Donald Trump looking to limit them over claims of possible fraud.

"A lot of investment professionals as well as retail investors are on the sidelines partially because they are waiting for this second stimulus package," Erin Gibbs, president and chief investment officer at Gibbs Wealth Management, said on Bloomberg TV.

"It's not a full-on risk-on environment just yet."

But the stand-off is just one of a number of issues nagging markets, with China-US tensions continuing to sour.

In the latest salvo, the US expanded sanctions on telecoms giant Huawei to further limit its access to computer chips and other products, with officials saying the firm was using subsidiaries to circumvent measures in place to prevent exports of American technology.

Beijing had already slammed Washington for using "digital gunboat diplomacy" after Trump ordered TikTok's Chinese owner ByteDance to sell its interest in the Musical.ly app it bought and merged with TikTok.

Beijing and Washington are butting heads over a range of issues including Hong Kong and the coronavirus.

While there are concerns the rows could affect the superpowers' recently signed trade pact, such fears have been played down by both sides.

"For the moment, the fact the trade deal remains in place, and will do while the two sides choose not to hold their six-month review that was to have taken place last weekend, is seen as overriding the building evidence of a technology cold war now under way," said National Australia Bank's Ray Attrill.

Support for Biden

Asian markets swung in and out of positive territory through the day.

Tokyo dropped 0.2 percent, while Singapore retreated 0.4 percent and Taipei gave up 0.7 percent.

Seoul tumbled more than two percent as South Korea saw a surge in new virus infections, having managed to control it for months.

But Hong Kong, Shanghai and Mumbai rose, while Wellington jumped more than one percent again after the government delayed New Zealand's general election by four weeks owing to a new virus flare-up.

Manila was also up more than one percent as a lockdown in the capital is eased, while there were also gains in Bangkok and Jakarta.

Sydney rose despite China launching a probe of Australia's wine exports to investigate dumping -- when a country sells goods in a country for less than it costs at home -- throughout 2019, at the request of the Wine Industry Association of China.

However, Treasury Wine Estates, which owns the Penfolds brand, tumbled more than 14 percent.

Analysts said there was not too much concern on markets about possible tax hikes if Joe Biden beats Trump in the race for the White House.

"Wall Street seems convinced that Biden's tax policy will not kill the stock market as stability in fighting the coronavirus and a conciliatory tone on trade will drive risk higher.

"A Biden presidency could offer greater certainty and stability for the economy."

In early trade, London, Paris and Frankfurt were all in negative territory.