Asian shares skid despite US stimulus deal

Shares started the week on a sour note in Asia as worsening coronavirus outbreaks overshadowed news that US lawmakers finally have a deal on more support for American families and businesses.

Markets fell in Japan, Hong Kong and South Korea on Monday, but rose in Shanghai.

Passage of the nearly $1-trillion COVID-19 economic relief package was expected later on Monday. However, a resurgence of virus outbreaks around the globe has dented optimism that vaccines can bring a swift end to the pandemic.

Most investors had already factored in expectations for the fresh stimulus, analysts said..

In Asia, new COVID-19 outbreaks have led authorities to impose lockdowns or other restrictions in Australia and Thailand. In Japan, the government has suspended a travel promotion programme and advised restaurants and bars to close early.

Meanwhile, in Britain the spread of an especially contagious form of the coronavirus has brought fresh limits on business and other activity. Other European governments are also stepping up measures to contain a resurgence of the pandemic.

Tokyo’s Nikkei 225 index lost 0.6 per cent to 26,613.05, while in Hong Kong the Hang Seng declined 0.5 per cent to 26,368.23. South Korea’s Kospi declined 0.6 per cent to 2,755.37 and in Australia, the S&P/ASX 200 shed 0.5 per cent to 6,643.60.

The Shanghai Composite index gained 0.3 per cent to 3,406.04. Shares rose in Taiwan, but fell in Singapore.

The US stimulus agreement is to establish temporary $300 per week supplemental jobless benefits and $600 direct stimulus payments to most Americans, along with a fresh round of subsidies for hard-hit businesses and funding for schools, healthcare providers, and renters facing eviction.

The final agreement was reached after a breakthrough over Federal Reserve emergency powers was resolved by the Senate’s top Democrat and a senior conservative Republican.

Wall Street retreated on Friday as investors waited to see if Congress would deliver on its promises of more cash for struggling workers and businesses.

The S&P 500 fell 0.4 per cent, a day after it and other major indices returned to record heights. The decline snapped a three-day winning streak for the benchmark index, but it still notched a 1.3 per cent weekly gain that more than made up its prior week’s loss.

Friday was a quadruple ‘witching day’, Wall Street-speak for the quarterly expiration of stock options and futures contracts, which forces traders to tie up loose ends in contracts they hold, leading to particularly heavy trading volume.

The S&P 500 index fell 13.07 points to 3,709.41. The Dow Jones Industrial Average lost 0.4 per cent to 30,179.05. The Nasdaq composite gave up 0.1 per cent to 12,755.64. The Russell 2000 dropped 0.4 per cent to 1,969.99.

The worsening pandemic has been tightening its chokehold on the economy. Reports last week showed more workers are applying for jobless benefits, and sales for retailers slumped by more last month than economists expected.

Wall Street’s hope is that a big stimulus for the economy might help carry it through a tough winter until the widespread roll-out of COVID-19 vaccines brings relief.

But it will be months before most people can get the shots, and the pandemic is likely to do even more damage in the interim.

In the bond market, the yield on the 10-year Treasury was at 0.93 per cent, down slightly from 0.94 per cent late Friday.

US benchmark crude oil lost $1.46 to $47.78 per barrel in electronic trading on the New York Mercantile Exchange. It gained 70 cents to $49.24 per barrel on Friday.

Brent crude, the international standard, declined $1.63 to $50.63 per barrel.

The dollar slipped to 103.29 Japanese yen from 103.32 yen on Friday. The dollar’s prolonged weakness against the yen prompted Prime Minister Yoshihide Suga to warn that the government did not want to see the dollar-yen rate fall below 100 yen.

The euro slipped to $1.2212 from $1.2262.

AP