Tokyo/Boston (Reuters)-Asian stocks fell on Wednesday amid growing uncertainty about whether U.S. congressmen will reach an agreement on another round of large-scale fiscal stimulus measures to support an economy that is still struggling in the coronavirus pandemic.
File picture: On February 28, 2020, in the Pudong Financial District of Shanghai, China, a man wearing a mask was attacked by a novel coronavirus outbreak in Shanghai when the country was being seen. REUTERS / Aly Song
However, the hope for vaccine development has prompted some investors to reduce safe-haven assets such as gold and government bonds, and buy back the stocks of companies hardest hit by the virus.
The mixed sentiment led to turbulence in Asian trading, with the exception of Japan’s Asia-Pacific stock index falling 0.76%, while Japan’s Nikkei index rose 0.2%.
After data showed that China̵
European stock markets are expected to open lower, and Euro Stoxx 50 futures fell 0.6%.
On Wall Street, the S&P 500 Index has won 7 consecutive days after hitting an all-time high for 2 consecutive months, that is, before the global outbreak of COVID-19.
During the decline, the political deadlock between the White House and Congressional Democrats over the coronavirus relief problem lasted for the fourth day.
Unless a bipartisan agreement is reached, the U.S. economy may be affected by measures taken by U.S. President Donald Trump to bypass Congress through an executive order on Saturday.
“We have huge uncertainty. As the election approaches, it seems difficult for both parties to compromise. Trump’s proposal will be smaller than market expectations. Whether they are also feasible is questionable,” Pictet strategist Junpei Tanaka said.
After Democratic presidential candidate Joe Biden chose Senator Kamala Harris as the vice president’s choice, the U.S. election campaign seemed to be gaining momentum.
The yield on Asian 10-year U.S. Treasuries fell by 1 basis point to 0.647%, after hitting 0.661% in 0.6 months on the previous trading day.
In addition to the hedging sell-off before the largest 10-year Treasury bond auction in history later in the day, the bonds also lost some safe-haven assets, also because of rising hopes for a COVID-19 vaccine.
Russian President Vladimir Putin said on Tuesday that after less than two months of human testing, Russia is the first country to implement regulatory approval for a COVID-19 vaccine.
Although Moscow’s decision has attracted some attention, the news makes people hope that certain vaccines currently under development will be available earlier than expected.
Investors bought back hotel industry stocks and other value stocks, causing Dow Jones, which was centered on the old economy, to surpass the technology-centric Nasdaq.
Globally, the MSCI Value Index has risen 1.6% so far this week, while the MSCI Growth Index has fallen 1.2%.
The most dramatic change occurred in precious metals.
Gold fell 1.6% to $1,881.4 per ounce, after the previous day’s biggest one-day decline in seven years. Silver fell 3.2% to US$23.99 per ounce, and fell 15% on Tuesday.
However, Michael Hsueh, commodities and foreign exchange strategist at Deutsche Bank in New York, said that this week’s decline is likely to attract new buyers.
He said: “In today’s circumstances, vaccine news may not be enough to change the macro narrative because it is considered a medical error that advances through the testing process too quickly,” he said.
The major currencies have hardly changed. The euro against the dollar is almost flat at 1.1728 dollars, and the yen against the dollar is almost flat at 107.27 dollars.
The New Zealand dollar fell 0.4% after New Zealand locked Auckland due to four new COVID-19 cases, and the Bank of New Zealand took a dovish stance.
After US inventories fell more than expected, oil prices rose slightly, and Brent crude oil rose 0.6% to $44.75 per barrel. US crude oil rose 0.5% to $41.80 per barrel.
Hideyuki Sano in Tokyo, with Lawrence Delevingne in Boston; other reporting by Tomo Uetake in Sydney, editing by Sam Holmes