Asian stock markets: Nikkei 225 mildly offered, ASX 200 gains 0.70% amid fears of coronavirus wave 2.0
- Shares in Asia remain mostly downbeat on virus, geopolitical concerns.
- Business sentiment in Asian companies sinks to 11-year low.
- Equities in Australia, New Zealand benefit from post-Brexit trade talks with the UK.
- The round two of Fed Chair Powell’s testimony, qualitative catalysts occupy the driver’s seat.
Stocks in Asia pause the previous two-day winning streak as market’s risk-on sentiment fades due to the latest coronavirus (COVID-19) updates from Beijing, Japan and the US. Also negatively affecting the mood could be the geopolitical tension among the Korean neighbors and also between India and China. Even so, expectations that the major central banks stay ready to again fuel the markets probe the selling pressure.
Beijing reported a total of 557 cases by Tuesday during the latest wave of a virus outbreak that caused fresh restrictions on travel and movement in the Chinese capital. On the other hand, pandemic numbers from Japan surged to the highest since May 30 whereas Florida and Texas also suffer from an increasing percentage of cases and hospitalization.
Following North Korea’s warning to move military, South Korean Major General Jeon Dong-jin said that the North will pay the price for any military actions. Further, China alleged India for the latest rise in fatalities over the border whereas the army from New Delhi has recently been given emergency power to deal with complete freedom against any Chinese aggression at the LAC. Elsewhere, the German intelligence report claimed that Iran seeks equipment to make internationally banned weapons. The news follows the early tweet from US Secretary of State Mike Pompeo that criticized Iran’s resistance in allowing international checks on two of its sites.
One should also note that the latest Reuters/INSEAD Survey suggests that the business sentiment of Asian companies sank to an 11-year low in the second quarter (Q2) of 2020.
Against this backdrop, MSCI’s index of Asia-Pacific shares outside Japan drops 0.13% with Japan’s Nikkei 225 marking 0.50% losses to 22,480 by the press time of the pre-European session on Wednesday. Though, Australia’s ASX 200 rises 0.50% whereas New Zealand’s NZX 50 is over 3.0% in the green zone.
Moving on, South Korea’s KOSPI shrugs off North Korean warnings with mild losses below 0.10% and so do indices in Indonesia and China which are flashing mixed signals with minor impacts. Furthermore, India’s BSE SENSEX gains 0.30% to 33,700 ahead of first-quarter trade numbers.
It should also be noted that the US stock futures are also drifting lower, with mild losses while the US 10-year Treasury yields snap two-day run-up while shedding over two basis points (bps) 0.73%.
Although the economic calendar has fewer important data/events, inflation figures from the UK and Canada will precede the second round of Fed Chair Jerome Powell’s testimony to direct markets.