Asian Markets Drop As US Stimulus Remains Elusive

Tokyo Stock Exchange
  • Asian markets mostly fell Monday with traders increasingly pessimistic that US lawmakers will pass a new stimulus package before next week’s election, while spiking virus cases fanned worries about the economic impact of new containment measures.
  • Adding to the negative sentiment is a surge of coronavirus cases across the United States and Europe, with the World Health Organization on Sunday reporting a third straight day of record new infections globally.
  • Traders are also keeping tabs on a key policy-setting meeting of China’s Communist Party this week, which is expected set the course for the world’s second-biggest economy for the next several years with an eye on US relations.
  • Visit The Financial Today’s homepage for more stories.

HONG KONG — Asian markets mostly fell Monday with traders increasingly pessimistic that US lawmakers will pass a new stimulus package before next week’s election, while spiking virus cases fanned worries about the economic impact of new containment measures.

Despite months of arduous talks in Washington, there appears to be little chance Republicans and Democrats will hammer out a rescue deal to help hard-strapped Americans, with both sides blaming each other for the impasse.

Analysts said investors had essentially given up hope of an agreement being made any time soon, and were now betting on Joe Biden and a Democratic sweep of Congress that would open the way for an even bigger spending package in the new year.

“There is very limited incentive on both sides to get a deal done,” Joseph Shaposhnik, a portfolio manager at TCW, told Bloomberg TV.

“The market has baked that in, has baked in the election and is looking out six months and thinking what are the odds life begins to normalize, a vaccine is introduced.”

Adding to the negative sentiment is a surge of coronavirus cases across the United States and Europe, with the World Health Organization on Sunday reporting a third straight day of record new infections globally.

The virus has now claimed the lives of 1.1 million people and infected more than 42 million around the world.

The new wave has already forced governments in several countries, including Britain, Germany, and France, to reimpose tough restrictions to prevent the disease from spreading.

“The US stimulus stalemate is now getting amplified through concerns about rising virus cases that could ultimately result in more stringent mobility restrictions and could even force additional business closures, which will most certainly put the economic recovery on the back foot into year-end,” said Axi strategist Stephen Innes.

Tokyo, Shanghai, Sydney, Mumbai, Seoul, and Singapore all fell, though there were gains in Taipei, Manila, and Jakarta.

Hong Kong was closed for a holiday.

Traders are also keeping tabs on a key policy-setting meeting of China’s Communist Party this week, which is expected set the course for the world’s second-biggest economy for the next several years with an eye on US relations.

Worries about fresh lockdowns and the lack of movement in stimulus talks also dented expectations for oil demand, sending prices tumbling more than two percent.

Key Figures (0720 GMT)

Tokyo – Nikkei 225: DOWN 0.1 percent at 23,494.34 (close)

Shanghai – Composite: DOWN 0.8 percent at 3,251.12 (close)

Hong Kong – Hang Seng: Closed for holiday

Euro/dollar: DOWN at $1.1836 from $1.1859 at 2100 GMT Friday

Dollar/yen: UP at 104.88 yen from 104.69 yen

Pound/dollar: DOWN at $1.3024 from $1.3043

Euro/pound: DOWN at 90.87 pence from 90.89 pence

West Texas Intermediate: DOWN 2.3 percent at $38.94 per barrel

Brent North Sea crude: DOWN 2.2 percent at $40.84 per barrel

New York – Dow: DOWN 0.1 percent at 28,335.57 (close)

London – FTSE 100: UP 1.3 percent at 5,860.28 (close)                

Image by Dick Thomas Johnson

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