Asia report: Stocks fall as Covid cases surge in US, Europe

Markets in Asia closed mostly lower on Thursday, following a serious drop on Wall Street overnight as the number of coronavirus cases continued to rise in Western countries.

In Japan, the Nikkei 225 was down 0.37% at 23.331.94, as the safe-haven yen strengthened 0.19% against the dollar to last trade at JPY 104.12.

Robotics specialist Fanuc managed gains of 0.45%, while among the benchmark’s other major components, Uniqlo owner Fast Retailing was off 1.47% and technology giant SoftBank Group lost 1.37%.

Sony went against the trend, rising 6.69% after it raised its profit expectations for the year.

The broader Topix index was 0.1% weaker by the end of trading in Tokyo, settling at 1,610.93.

Investor expectations were sated by the Bank of Japan, which kept its monetary policy on hold on Thursday, as it revised its 2020 GDP forecast to a 5.5% decline.

That was a widening of the central bank’s negative expectations for the Japanese economy from its previous update in July, when it predicted a 4.7% fall in real gross domestic product.

In other economic news from the country, retail sales were 8.7% lower year-on-year in September, which was worse than the 7.7% decline predicted by a Reuters poll.

On the mainland, the Shanghai Composite managed gains of 0.11% to 3,272.73, and the smaller, technology-centric Shenzhen Composite rose 0.47% to 2,249.57.

South Korea’s Kospi slipped 0.79% to 2,326.67, while the Hang Seng Index in Hong Kong lost 0.49% to 24,586.60.

Both of the blue-chip technology stocks were weaker in Seoul, with SK Hynix down 1.45%, and Samsung Electronics losing 1.53%.

The losses for Samsung came after the company forecast a decline in profits for the fourth quarter earlier in the session.

Standard Chartered was among the leading losers in Hong Kong, meanwhile, falling 3.14% after it reported a 40% fall in profit before tax for the quarter ended 30 September.

“Lower interest rates continue to impact income but we remain well-positioned to meet our financial targets, albeit with some delay,” said chief executive officer Bill Winters.

The sell-off in Asia came on the back of a major downturn in sentiment on Wall Street overnight, as the Dow lost more than 900 points in its fourth negative session in a row.

That came after the United States set the third consecutive record for daily Covid-19 cases on Tuesday, while both Germany and France announced fresh lockdown restrictions on Wednesday as cases also surge in Europe.

“A more modest sell-off in Asia on Thursday helped by the region's better outlook for the pandemic is allowing for some let-up in the selling that took hold Wednesday,” said London Capital Group head of research Jasper Lawler.

He noted that, while the Dow crashed over 900 points, bonds also fell alongside stocks.

“It goes to show rising yields are pricing in more issuance after stimulus but not necessarily an economic rebound.

“The worry from a US standpoint is that there will be a repeat for the sequencing from the first wave, first Europe sees rising cases and locks down and the US follows.”

That, Lawler said, would be “especially true” after a Joe Biden election victory.

“Without a clear public health plan like a vaccine or cure to the coronavirus, governments are falling back on lockdowns as the primary way to deal with rising infections.

“The decisions in the major economies of Europe to introduce stricter lockdowns are rendering this earnings season obsolete.”

Oil prices were lower as the region went to bed, with Brent crude last down 3.02% at $37.94 per barrel, and West Texas Intermediate losing 3.08% to $36.24.

In Australia, the S&P/ASX 200 slid 1.61% to 5,960.30, while across the Tasman Sea, New Zealand’s S&P/NZX 50 lost 0.51% to 12,201.80.

Both of the down under dollars were weaker on the greenback, with the Aussie last off 0.11% at AUD 1.4209, and the Kiwi retreating 0.03% to NZD 1.5069.