Stocks weaken as virus outbreaks fuel fears of global recovery
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HONG KONG, July 20 (Reuters) – Asian stocks were down Tuesday morning as growing fears that the spread of the Delta variant of the coronavirus could hurt the global economic recovery sent riskier assets, including oil, slipping sharply. .
The MSCI index of Asia-Pacific stocks outside Japan (.MIAPJ0000PUS) fell 0.29%, the Australian S & P / ASX 200 (.AXJO) was down 0.39%.
Japan’s Nikkei 225 (.N225) hit a six-month low early in trading and widened losses to 1.05%.
The Hang Seng Index (.HSI) opened 0.3% lower and the Chinese benchmark CSI300 (.CSI300) slipped 0.7% to start.
In Beijing, policymakers kept the key rate on business and household loans unchanged when it was set in July on Tuesday, despite rising expectations of a cut after a surprise drop in bank reserve requirements.
“The markets are clearly in risk mode,” said Edison Pun, senior market analyst at Saxo Markets, adding that Wall Street’s uptrend is weakening.
Shares on Wall Street fell as much as 2% on Monday, with the Dow Jones posting its worst day in nine months as COVID-19 deaths rose in the United States.
The riskiest assets globally have come under pressure recently as many countries struggle to contain the outbreak of the fast-spreading Delta virus variant, raising fears that further lockdowns and other restrictions will upend the crisis. global economic recovery.
“Despite the vaccine rollout, markets don’t seem to be learning to live with COVID-19,” ANZ analysts wrote in a note to customers.
“Sentiment appears to have shifted, at least for now, to a belief that growth and earnings expectations may be exaggerated,” they said, noting that risk-averse investors were bailing out commodities.
Oil prices plunged more than 6%, driven both by concerns about future demand and an OPEC + deal to increase supply. Read more
US yields rose on Tuesday after Monday’s meteoric rally. The 10-year yield hit 1.2087% after a close of 1.181%, a level last seen in February, and the 2-year yield edged up to 0.2196% from 0.21% on Tuesday.
However, as the US yield curve steepened slightly, the spread between US 10-year and 2-year yields remained close to February lows, signaling investor doubts about growth prospects.
Japan’s consumer staples prices rose 0.2% in June from a year earlier to mark the fastest annual pace in more than a year, mainly due to rising costs of l energy, a sign that the impact of global commodity inflation has gradually widened. Read more
US crude was able to stabilize and cut losses on Monday, up 0.74% to $ 66.91 a barrel, while Brent also rallied to gain 0.45% to $ 68.93 the barrel. However, both were still down sharply from late last week.
Spot gold XAU = was flat at $ 1,813.15 an ounce, after falling to a one-week low of $ 1,794.06 in the previous session.
Reporting by Kane Wu in Hong Kong; additional reporting by Andrew Galbraith in Shanghai Editing by Shri Navaratnam
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