Asian stocks slide with US and Europe as coronavirus cases surge

The S&P 500 lost 3.5% on Wednesday, its biggest drop since June

A pedestrian looks at an electronic stock board displaying the stock average outside a securities firm in Tokyo on Thursday. Bloomberg

Asian stocks dropped on Thursday after shares tumbled in the US and Europe, as rising coronavirus infections and tougher lockdowns added to worries about the economic hit from the pandemic.

The US futures rebounded from the worst of the overnight declines.

Losses were more modest across Asia than in the American session, with shares in South Korea and Australia faring worst.

The S&P 500 contracts however climbed about 1 per cent after the benchmark lost 3.5 per cent on Wednesday – its biggest drop since June. The dollar held its overnight advance and Treasuries retreated, with 10-year yields rising to 0.79 per cent. Oil was steady after tumbling more than 5 per cent on concern rising infections will sap demand.

In China, nearly 1,000 firms are releasing third-quarter earnings on Thursday, with traders looking to see if the results confirm the nation’s accelerating recovery. The yen held a small decline after the Bank of Japan kept its key interest rate and asset purchases unchanged.

An MSCI gauge of global equities is down almost 5 per cent this week as virus cases surge and after American politicians failed to agree on an economic aid package before the November 3 election. The New York-based MSCI serves as a global provider of equity, fixed income, hedge fund stock market indexes and multi-asset portfolio analysis tools.

Germany and France are imposing stricter lockdowns, while Italy, Spain and the UK all reported record case numbers on Wednesday.

“We have got the election hanging over our heads. Then obviously Covid accelerating to the degree that it has both here in the US as well as in Europe,” said Lori Heinel, deputy global chief investment officer at Boston-based State Street Global Advisors.

“And then you have got the lack of stimulus, which in our estimation is still necessary to get us through this period until we get an ultimate medical solution,” she added.

S&P 500 Index futures added 0.9 per cent as of 12.12pm in Tokyo (7.12am UAE time). Japan’s Topix index fell 0.5 per cent, South Korea’s Kospi index was down 1.7 per cent,  the Hang Seng Index fell 1 per cent, while the Shanghai Composite rose 0.2 per cent. Australia’s S&P/ASX 200 Index retreated 1.7 per cent.

Elsewhere, the pound steadied as European Union and the UK negotiators made progress towards resolving some of the biggest disagreements, raising hopes that a Brexit deal could be reached by early November.

The European Central Bank’s policy decision is due later Thursday, with the new coronavirus lockdowns by the euro zone’s biggest economies boosting the chance of pre-emptive monetary stimulus.