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Asian stocks were due to open lower on Wednesday, weighed down by a weaker finish on Wall Street after US President Donald Trump dashed hopes for a fourth stimulus package with a tweet.
Men in protective masks chat in front of a screen displaying Nikkei stock average and world stock indices outside a brokerage in Tokyo, Japan, on October 5, 2020 (Photo: REUTERS / Issei Kato)
NEW YORK: Asian stocks were due to open lower on Wednesday, weighed down by a weaker finish on Wall Street after US President Donald Trump dashed hopes for a fourth stimulus package with a tweet.
S&P 500 futures fell 0.58% in early trading, while Australia’s S & P / ASX 200 futures and Japan’s Nikkei 225 futures lost 0.29% and 0.17%, respectively.
Wall Street had initially risen on Tuesday following news that President Trump had returned to the White House from his COVID-19 hospitalization, removing some of the political uncertainty that plagued investor sentiment last week.
However, those gains were drastically reversed when the president announced on Twitter that he had halted negotiations for additional stimulus until after the election.
Reliving political uncertainty, a growing number of senior US government officials tested positive for coronavirus after President Trump revealed his own diagnosis. More recently, most members of the Joint Chiefs of Staff disrupted in-person meetings and went into quarantine after a coast guard officer tested positive.
Earlier on Tuesday, Federal Reserve Chairman Jerome Powell warned that the world’s largest economy would face a weak recovery without further fiscal support.
Central bank watchers will get a more detailed look at board members’ views on the economy when the Fed releases its minutes early Wednesday.
The Dow Jones Industrial Average fell 1.34%, the S&P 500 lost 1.40% and the Nasdaq Composite fell 1.57%.
MSCI’s global stocks indicator lost 0.64%.
Spot gold also fell on the news, falling 1.4% to $ 1,886.01 an ounce at the end of the session and continued to decline after hours.
Tuesday’s drops may have been an overreaction, as some market players had already calculated a failure in the talks between Republicans and Democrats.
“Our view for some time was that a stimulus deal was unlikely before the November 3 presidential election,” Commonwealth Bank of Australia Head of International Economics Joseph Capurso said in a note.
The radical turnaround of the Trump administration also boosted safe haven demand for the dollar and US Treasuries.
The dollar index was up 0.468 percent and the euro was down 0.04 percent at $ 1.1729.
On Tuesday, US 10-year yields rose to 0.773% from 0.762% late on Monday, while 30-year yields rose to 1.585%, down from 1.567%.
Oil prices closed higher due to hurricanes in the Gulf of Mexico and a workers’ strike in Norway that threatened to curb supply, but post-closing trade points to a lower open.
Brent crude futures fell to $ 42.19 a barrel in after-hours trading after closing at $ 42.65, and West Texas Intermediate (WTI) crude fell to $ 40.13 a barrel from $ 40.67 .
(Reporting by Imani Moise; Editing by Sam Holmes)
