Virus casts shadow over recovery of Asian mkts

Bangkok: Shares skidded in Asia on Wednesday after Wall Street closed lower for a second straight day, led by drops in technology companies and banks. Worsening coronavirus outbreaks in Asia have cast a shadow over prospects for a rebound from the pandemic.

Tokyo's Nikkei 225 fell more than 2 per cent and other benchmarks also declined. On Tuesday, the S&P 500 gave back 0.7 per cent, pulling the index further below the record high it set on Friday. Small-company stocks, which have been beating the rest of the market in recent months, fell more than other sectors.

Asian governments are scrambling to secure supplies of Covid-19 vaccines after seeing infection numbers surge in recent weeks. The rising caseloads are straining medical systems from Japan to India and leading to a restoration of pandemic precautions such as travel restrictions, quarantine requirements and a dimming of nightlife.

The Nikkei 225 in Tokyo gave up just over 2.0 per cent to 28,508.55 while Hong Kong's Hang Seng declined 1.7 per cent to 28,655.76. In Seoul, the Kospi lost 1.5 per cent to 3,171.66, while Sydney's S&P/ASX 200 shed 0.3 per cent to 6,997.50. The Shanghai Composite index ended flat at 3,472.93.

"Global stocks are still plumbing the lows after renewed virus concerns spooked markets overnight," Stephen Innes of Axi said in a commentary. Worsening outbreaks in India and Thailand have also cast a pall on a recovery in travel, which in turn is clouding the outlook for oil and fuel prices, he said.

On Wednesday the S&P 500 closed at 4,134.94. The Dow Jones Industrial Average lost 0.8 per cent to 33,821.30. After shedding an early gain, the technology-heavy Nasdaq slid 0.9 per cent, to 13,786.27. Apple fell 1.3 per cent as part of a broad slide in technology companies. Banks also accounted for a big share of the selling, which came as bond yields fell, reversing course after moving higher on Monday.

The yield on the 10-year Treasury fell to 1.57 per cent from 1.60 per cent. Bank of America dropped 2.8 per cent and Citigroup slid 3.2 per cent. Investors have turned defensive, favouring utilities, real estate stocks and a mix of companies that make consumer staples like food and household products.

General Mills rose 1.6 per cent and Clorox added 3 per cent. The market has been swaying between gains and record highs to pullbacks as investors weigh solid economic growth against the risks still posed by the pandemic. That push and pull will likely continue as vaccine distribution rolls on and various industries reopen.