Asian markets decline as virus and Sino-US tensions erupt

SINGAPORE / WASHINGTON (Reuters) – Asian stock markets fell on Tuesday, oil sank and a security offer supported the dollar as tensions between China and the US and new coronavirus restrictions in California maintained a control over investor optimism as the earnings season begins.

MSCI’s broader index of Asia-Pacific stocks outside Japan fell 1.2%. Japan’s Nikkei pulled out of a month-high touched on Monday, falling 0.8%. A firm dollar put pressure on the Australian and the kiwi. [AUD/]

The moves came after a sell-off on Wall Street that followed the reopening of setbacks in California, where Governor Gavin Newsom ordered the closure of bars, restaurants, and movie theaters to cease indoor operations.

S&P 500 futures held steady in Asia after the index lost 0.9% on Monday. [.N]

Meanwhile, tension grew between the United States and China. The United States on Monday rejected China’s disputed claims to offshore resources in most of the South China Sea, a change in tone that prompted a reprimand from Beijing.

The Trump Administration also plans to remove a 2013 audit deal that could presage a broader crackdown on Chinese companies listed in the U.S., as friction between the world’s two largest economies generates heat on a broad front. .

“It is not just the pace that is improving, but the appearance of so many areas that are being drawn into the dispute,” said Vishnu Varathan, chief economist at Mizuho Bank in Singapore.

“The last time was really about the bottom line,” he said, but now what had been primarily a trade dispute stretches across political and strategic dimensions, making a resolution less likely and upcoming moves less predictable.

California’s return to restrictions also has markets on the verge of whether the virus can cause further economic harm, as total infections increased by one million in five days and now exceed 13 million.

Oil prices, an indicator of world energy consumption and, therefore, growth expectations, reflected growing concerns. US crude futures fell 2% to $ 39.23 a barrel, and Brent futures fell 1.8% to $ 41.94 a barrel. [O/R]

ALL ABOUT 2021

The pullback from risky assets remains modest but, at least temporarily, has left breathtaking sections of the markets breathless.

The tech-heavy Nasdaq lost 2% on Monday and Tesla shares fell 3%, hitting the brakes in a rally that has boosted the shares of the electric car maker by more than 40% in two weeks.

Along with the virus, there are also signs of a disruption in the steady stream of better-than-expected economic data. On Tuesday, data showed Singapore went into recession last month, and the economy contracted 41.2% in the quarter, worse than the 37.4% that analysts had forecast.

Chinese customs data showed that exports and imports increased last month, in yuan-denominated terms, over the same period last year. Dollar-denominated figures expire later on Tuesday.

The currency markets kept the dollar in a narrow range, with the kiwi halting its upward routine at $ 0.6532 and the Australian trailing at $ 0.6941. [FRX/]

The euro held on to overnight gains at $ 1.1346, although it expects German sentiment data at 0900 GMT for the next reading on Europe’s recovery.

The focus then shifts to U.S. earnings, with JP Morgan, Citigroup, and Wells Fargo, as well as Delta Air Lines, which will report Tuesday to a market already looking to 2021 and beyond.

“It really is about 2021-2020 is over,” said fund manager Hugh Dive, chief investment officer at Atlas Funds Management in Sydney, where the earnings season begins appropriately next month.

“The outlook statements are what the market will look at,” he said. “If a company surprises to the upside with its 2020 earnings but has shaky comments by 2021, well, they won’t be rewarded for that.”

Spot gold was below recent spikes at $ 1,797.30 an ounce and US Treasury bonds held firm. The yield on 10-year US government benchmark debt was $ 0.6168%.

Chart: Asian stock markets here