BANGKOK — Shares were mixed in Asia on Wednesday after Wall Street logged its biggest loss in May on worries about the downside of reopening the economy too soon.
Tokyo’s benchmark slid, while stocks reversed early losses in Shanghai and Hong Kong. India’s Sensex jumped 2.3% on hopes for fresh government support for the economy.
Underscoring concerns about the risks of ending shutdowns before the coronavirus pandemic is brought under control, the top U.S. infectious diseases expert, Dr. Anthony Fauci, told Congress bluntly that if the country reopens too soon, it could not only cause “some suffering and death that could be avoided, but could even set you back on the road to try to get economic recovery.”
Those comments reverberated in global markets
“Over and above the recent resurfacing of cases in countries such as China and Germany, Dr. Fauci’s comments pack in more arguments against a rapid reopening of U.S. states which had been supported by President Donald Trump and fueled the gains seen for U.S. markets of late,” Jingyi Pan of IG said in a report.
Across Asia, too, governments have been loosening restrictions as they try to staunch the economic carnage from pandemic shutdowns, despite signs of fresh outbreaks.
In China, where the virus first surfaced, authorities announced seven new cases on Wednesday. Six were in Jilin province, in the northeast, where alert levels were raised and rail connections suspended.
South Korea reported 26 additional cases of the coronavirus over the past 24 hours amid a new spike in infections linked to nightclubs in Seoul.
Pakistan, meanwhile, confirmed 2,000 new positive coronavirus cases in a single day, just days after its prime minister, Imran Khan, eased lockdown restrictions and stepped up the return of Pakistanis stranded overseas despite pleas for stricter controls by Pakistan’s medical professionals.
Tokyo’s Nikkei 225 index lost 0.5% to 20,267.05 while the Hang Seng in Hong Kong edged 0.1% higher, to 24,262.62.
The Shanghai Composite index gained 0.3% to 2,899.38 and South Korea’s Kospi jumped 0.1% to 1,935.00 after the government said it needed more time to assess recent outbreaks and would not immediately re-impose new restrictions to fight the virus.
Australia’s S&P ASX 200 shed 0.4% to 5,379.80, while shares in Taiwan surged 0.5%.
The market will essentially be in wait-and-see mode for the next two to four weeks as investors gauge how reopenings are going, analysts said.
“No one and I mean no one including corporations, wants to wear the scarlet letter for being responsible for the secondary outbreak,” Stephen Innes of AxiCorp said in a commentary.
“So while re-openings may occur, but they will only happen in a gradual context where social distancing rules permit or workplace safety can be exercised,” he said.
After dropping by roughly a third from February into late March on worries about the coming recession, share prices began recovering after central banks and governments unleashed trillions of dollars of help for swooning economies. The latest implementation of that came Tuesday, when the New York Fed began buying funds to support the corporate bond market.
The S&P 500 dropped 2.1% to 2,870.12 on Tuesday after spending much of the day drifting between small gains and losses, as investors debated whether the lifting of lockdowns across U.S. states and the world will drive an economic rebound or just more coronavirus infections.
The Dow Jones Industrial Average fell 1.9% to 23,764.78, and the Nasdaq composite lost 2.1%, to 9,002.55. The Russell 2000 index of small-cap stocks lost 45.70, or 3.5%, to 1,275.54.
Treasurys were some of the first investments to signal the economic devastation coming from the pandemic. The yield on the 10-year Treasury was steady at 0.67%, down from 0.72% late Monday. It tends to fall when investors are downgrading their expectations for the economy and inflation.
A barrel of U.S. oil to be delivered in June fell 28 cents to US$26.05 per barrel in electronic trading on the New York Mercantile Exchange. On Tuesday, it gained $1.25 to $26.33. Brent crude, the international standard, gave up 49 cents to $29.40 per barrel.
The dollar was trading at 107.15 Japanese yen, up from 107.13 late Tuesday. The euro strengthened to $1.0852 from $1.0848.
