Asia’s markets subdued as Covid casts a cloud over recovery hopes

Wall Street saw another record day but traders around the Pacific were less energetic as the spreading Delta variant of the virus sees lockdowns and restrictions return

Asia’s markets struggled on Thursday despite another record close in New York, with investors distracted by the rapidly spreading Delta Covid variant.

The resurgence of the virus has forced several governments to reimpose lockdowns and raised concerns about the pace of economic recovery.

The upcoming release of US jobs data is also on the horizon, with a forecast-beating jump on private employment lifting hopes for a strong reading that will solidify optimism about growth in the world’s top economy.

Also on AF: China won’t be bullied, Xi says, as party marks centenary

While inflation is expected to continue surging over the next few months, worries that the Federal Reserve will tighten its ultra-loose monetary policy too soon or too quickly have eased, with bank officials saying they will be measured in their tapering.

Having fluctuated over the past three days, Asia equities were largely lower Thursday.

Tokyo slipped, with little reaction to the Bank of Japan’s Tankan business survey showing confidence among major manufacturers was at its highest level since 2018.

The benchmark Nikkei index closed down for a fourth consecutive session as tech shares faced selling pressure, while investors awaited key US economic data due later this week.

BROAD SELL-OFF

The Nikkei 225 index slid 0.29%, or 84.49 points, to 28,707.04, while the broader Topix index fell 0.22%, or 4.36 points, to 1,939.21.

Shares in mainland Chinese markets finished with losses on Thursday, in line with a broad sell-off across Asia, as traders tracked rising virus cases around the world.

The benchmark Shanghai Composite Index edged down 0.07%, or 2.42 points, to 3,588.78, while the Shenzhen Composite Index on China’s second exchange sank 0.97%, or 23.99 points, to 2,442.26.

HONG KONG HOLIDAY

Shanghai, Sydney, Singapore, Seoul, Taipei and Mumbai fell but Wellington, Manila, Bangkok and Jakarta edged up. Hong Kong was closed for a holiday.

The S&P 500 clocked up its fifth straight record, to end the first half of the year more than 14% higher.

US traders cheered data showing private firms added 692,000 jobs in June, a big drop from the month before but well above expectations. The report added to a recent run of figures showing strong consumer confidence, rising home prices and positive corporate earnings.

PAYROLLS DATA

The main event this week comes on Friday, with the release of government non-farm payrolls, which will provide a clearer snapshot of the economic progress and could play a role in Fed deliberations on monetary policy.

Oil prices extended Wednesday’s rally as OPEC and other major producers prepared for their monthly meeting later in the day at which they are expected to lift output as demand rides on the back of the economic recovery.

Both main contracts are sitting around multi-year highs in the mid-$70 range and some observers are forecasting a break above $80, with even $100 being tipped.

MARKETS

Tokyo – Nikkei 225: DOWN 0.3 percent at 28,707.04 (close)

Shanghai – Composite: DOWN 0.1 percent at 3,588.78 (close)

Hong Kong – Hang Seng Index: Closed for a holiday

New York – Dow: UP 0.6 percent at 34,502.51 (close)