· Asia stocks retreat as virus threatens economic reopening
Asian share markets began the week with a cautious tone on Monday as the relentless spread of the coronavirus finally made investors question their optimism on the global economy, benefiting safe harbour bonds and crimping oil prices.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.3% and further away from a four-month top hit last week. Japan’s Nikkei shed 2.2% and Chinese blue chips 0.9%.
Wall Street had faltered on Friday as some U.S. states reconsidered their reopening plans. The global death toll from COVID-19 reached half a million people on Sunday, according to a Reuters tally.
About one-quarter of all the deaths so far have been in the United States, with cases surging in a handful of southern and western states that reopened earlier.
· Japanese stocks end at 2-week low, track Wall St losses
Japanese shares sank on Monday, tracking Wall Street’s sharp retreat after several U.S. states imposed business restrictions to tackle a resurgence in new coronavirus cases.
The benchmark Nikkei average tumbled 2.3% to 21,995.04 points, its lowest close since June 15, with cyclical stocks leading the decliners.
The Nikkei also fell below a major support level of its 25-day moving average, which was last at 22,356, for the first time since April 7.
Wall Street’s major indexes plunged on Friday as some U.S. states reconsidered their reopening plans after the early lifting of restrictions was followed by a resurgence in new infections.
Further denting investor sentiment, the Wall Street Journal reported that the Phase 1 U.S.-China trade deal could be at risk.
The broader Topix lost 1.8% to 1,549.22, also a two-week low, with all of the 33 sector sub-indexes on the Tokyo exchange finishing lower.
· China stocks fall on fresh virus spike concerns, brokerages lead declines
China stocks ended lower on Monday as sharp spikes in new coronavirus infections at home and around the world raised concerns about the country's nascent economic recovery.
At the close, the blue-chip CSI300 index fell 0.7 per cent to 4,109.72, while the Shanghai Composite Index lost 0.6 per cent to 2,961.52. The tech-heavy start-up board ChiNext Composite index eased 0.4 per cent on profit-taking.
Chinese investors, coming back from a long weekend after the Dragon Boat Festival, reacted to signs of a worsening pandemic as the global death toll touched half a million people, and Wall Street slumped over 2 per cent on Friday.
· European markets open lower as coronavirus death toll weighs on sentiment
European stocks opened in negative territory Monday as investors digest the rising coronavirus death toll.
The pan-European Stoxx 600 edged 0.3% lower at the start of trading, with basic resources and oil and gas stocks shedding 0.7% to lead losses as the majority of sectors and major bourses opened in the red.
Global markets are reacting to the news that the coronavirus has now killed more than 500,000 people around the world, according to data compiled by Johns Hopkins University. The number of confirmed infections has now exceeded 10 million.
· Wall Street is underpricing a Joe Biden presidential win, Wells Fargo’s Chris Harvey warns
Wells Fargo Securities’ Christopher Harvey believes the market is underestimating a major risk — and it’s not the coronavirus.
According to the firm’s head of equity strategy, a Joe Biden presidential win could throw Wall Street a curve ball and hurt the recovery.
The concern: A Biden win could result in changes to the tax code which would be a negative for stocks.
“Biden is moving up in the polls,” noted Harvey. “What does that mean for taxes? Can they [Democrats] win? Not just the White house, but can they win the Senate, as well?”
He’s maintaining his S&P 500 year-end price target or 3,388, which reflects about a 13% increase from current levels.
Despite his long-term bull case for stocks, Harvey warns the market is vulnerable to 5% to 10% pullback from current levels.
“We’ve been cautious on the market for a few weeks now,” he said. “We’ve gone a little bit too far, too fast. And, now we just need a healthy correction.”
· Morgan Stanley is bullish on Singapore stocks and expects 14% returns
Morgan Stanley is bullish on Singapore stocks and expects as much as 14% returns for the MSCI Singapore index over the next 12 months.
In fact, investors could increasingly be looking to Singapore as a safe place to invest in as uncertainty roils the region, the investment bank said.
“We could see inflows supported by a growing of perception of Singapore as a safe haven amid geopolitical and economic uncertainties in the region,” analysts Wilson Ng and Derek Chang wrote in a report last week.
Reference: CNBC, Reuters
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