Global Markets: Asia’s COVID-19 Control Tempers Global Equity Sale, US Futures Surge

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SINGAPORE (Reuters) – Asian stock markets fell on Thursday, but without the selling panic seen in Europe and the United States, as US futures surged as investors tried to contain fears that further lockdowns could derail a recovery of the COVID-19 pandemic.

FILE PHOTO: A man works at the Tokyo Stock Exchange after the market opens in Tokyo, Japan, October 2, 2020. REUTERS / Kim Kyung-Hoon

The largest MSCI index of Asia-Pacific stocks outside of Japan fell 0.6%, the largest declines in Australia, down 1.6%, and South Korea, down from 1%.

The Japanese Nikkei fell just 0.3%, Chinese blue chips rose 0.5% and the yuan led Asian currencies to rebound slightly against the greenback.

It was a far cry from the biggest falls on Wall Street and in Europe for months on Wednesday, underscoring Asia’s emergence from a pandemic that has further bogged down the rest of the world.

Traders lifted S&P 500 futures 1% with the mood and hopes that rising volatility could mean a quick rebound. European futures were up half a percent and FTSE futures were up 0.3%.

“Asia is not really participating in this second or third wave story because it has its COVID largely under control,” said Rob Carnell, chief economist in Asia at Dutch bank ING.

“As a result, the national savings appear reasonable.”

As to illustrate, Taiwan, which has Asia’s best-performing currency, marked its 200th consecutive day without local transmission on Thursday as France and Germany braced for lockdowns and as the virus sweeps through the US Midwest .

Oil also stabilized Thursday, with Brent futures up 0.2% to $ 39.20 a barrel, after falling 5% on Wednesday. [O/R][AUD/]

Yet for the week so far, the commodity, often seen as a proxy for global energy demand and growth, is down 6.2% and global equities are down 4.7%, while the pandemic is worsening and an American election is looming.

“Until yesterday, the market was traveling with the expectation that improving health services to deal with the pandemic would prevent the introduction of severe lockdowns,” said Rodrigo Catril, strategist at National Australia Bank FX.

“At least in Europe, that dynamic has now changed… the question now is whether American states will follow suit. “

FUNDAMENTALS

Economic data and a European Central Bank meeting will be the focus of concern later Thursday, with growing uncertainty over Tuesday’s U.S. election also keeping investors on the lookout.

The Bank of Japan did not change monetary policy parameters, as expected, but cut its growth forecast to reflect sluggish spending on services over the summer.

Investors expect the European Central Bank to similarly delay new measures, but instead hint at action in December, which should contain the euro.

The common currency hit a 10-day low on the dollar and a 100-day low on the yen on Wednesday, before recovering slightly. He last bought $ 1.1752.

German unemployment and inflation data, European confidence surveys and leading US GDP figures will also be closely watched – the US figure is expected to show record growth, but leave the economy where it started in 2020.

“Any disappointment with these numbers may have a further impact on the market, given the current weakness,” said Michael McCarthy, CMC Markets strategist based in Sydney.

Investors are also increasingly wary of a contested US election outcome that could trigger a wave of risky asset sales.

Wall Street’s “fear gauge”, the Cboe volatility index surged Wednesday to its highest level since June and implied currency volatility indicates a wild ride is expected.

The US bond market, however, was drowsy as investors looked past Election Day and believed huge government borrowing for coronavirus relief spending would occur regardless of who wins.

US 10-year benchmark yields rose overnight and added about half a basis point Thursday to 0.7877%.

Report by Tom Westbrook in Singapore. Additional reporting by Pete Schroeder in Washington; Edited by Lincoln Feast.

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