By Swati Pandey and Chibuike Oguh
SYDNEY (Reuters) – A gauge in Asian equities eased on Wednesday amid losses on Chinese and Hong Kong stocks, although it is still close to a seven-month peak, due to an ever-growing political stimulus aimed at cushioning the blow of the coronavirus pandemic.
In an indication of a positive start for Europe, Eurostoxx 50 and Germany futures were up 0.3% each while London futures added 0.2%.
The E-Minis for the S&P 500 were last up 0.15%.
Asian stocks also started the day on a positive note before profit-taking emerged in Chinese and Hong Kong stocks.
The largest MSCI Asia-Pacific stock index outside of Japan has broken two straight days of gains, plunging 0.1% after hitting a previously high 571.33 points, a level not seen since late January.
China’s blue chip index slipped 1% after a strong rally in recent days, while Hong Kong’s fell 0.9%.
Australian stocks ended up 0.8%, and South Korea added 0.8%. increased by 0.25%.
While emerging markets found some support from the low-yielding environment and a weaker US dollar, concerns about the economic blow from the pandemic kept investors nervous, analysts said.
“The continued economic impacts of the current crisis and the limited capacity for fiscal and monetary stimulus, with the exception of China, weighed on sentiment despite the falling dollar,” T. Rowe Price analysts wrote in a commentary. note.
“While a weaker US dollar removes a significant headwind for emerging market assets, greater risks abound for larger emerging markets as they continue to weather the crisis. ”
On Tuesday, the S&P 500 set records shortly after the opening bell, helped by strong sales growth reported by major US retailers including Walmart (NYSE :), Kohl’s (NYSE 🙂 and Home Depot (NYSE :).
The closely watched S&P 500 surpassed an all-time high reached in February just before the start of the COVID-19 pandemic drove the benchmark to a low on March 23. The index has jumped about 55% since then.
At just 126 days, it’s “the fastest bear market rally ever,” said Tapas Strickland, economist at Melbourne-based National Australia Bank (OTC :).
The Nasdaq recorded its 18th closing record since early June.
The US Federal Reserve’s intervention in financial markets to maintain liquidity amid the coronavirus pandemic has pushed risk assets to record highs and reduced demand for safe-haven securities, weakening the greenback.
Market optimism was also supported by data showing maximum acceleration in US residential construction in nearly four years in July, which means the housing sector is emerging as one of the few strong points.
Additionally, hopes for an interim budget package were revived overnight, with House Speaker Nancy Pelosi indicating a willingness to scale back their proposals in order to seal a deal, NAB’s Strickland noted.
Markets also paid close attention to the minutes of the recent Fed meeting expected later today “for any indication of what the Fed might say regarding the outlook coming in September,” Strickland said.
The Fed cut rates to near zero to support business during the pandemic, sending the dollar back to its lowest level in 27 months.
The latter barely changed to 92.22 from above 100 in March. The safe haven Japanese yen was a little lower at 105.50 against the greenback.
The risk-sensitive Australian dollar traded close to $ 0.7250, while the latter bought $ 0.6621.
Gold flirted with key chart resistance of $ 2,000 an ounce to be last at $ 1,989.6.
The US was a shade lower at $ 2,001.5.
Oil prices skidded as fears grew that US demand for fuel would not recover quickly. [O/R]
down 40 cents to 45.06 and down 32 cents to $ 42.57.