SYDNEY (Reuters) – Asian stocks rebounded from a lower month on Monday, aided by Chinese factory activity which grew at its fastest pace in a decade, while oil prices slipped as many Western countries were falling back into lockdowns due to coronaviruses.
Tuesday’s US presidential election is a major risk event this week, with Republican President Donald Trump edging Democratic challenger Joe Biden in national opinion polls.
Polls in the more competitive states that will decide the election, however, showed a tighter race, still in favor of Biden.
Largest MSCI Asia-Pacific Equity Index outside of Japan .MIAPJ0000PUS climbed 0.36%, as China’s Caixin / Markit Manufacturing Purchasing Managers Index offered hope that the region’s success in containing the coronavirus could spare it the economic pain inflicted on Europe and in the USA.
The mood in Europe was pessimistic, with many countries in the region battling new COVID-19 infections and falling back into viral lockdowns.
In early European exchanges, pan-regional Euro Stoxx 50 futures STXEc1 were down 0.1%, German DAX futures FDXc1 were stable and future London FTSEs FFIc1 were off 0.4%.
In Asia, by contrast, all major indices except New Zealand were up on Monday.
Australian stocks .AXJO increased by 0.4%.
Chinese shares were higher with blue chip CSI300 .CSI300 up 0.3%, with the country’s vast industrial sector steadily returning to levels seen before the COVID-19 pandemic crippled huge swathes of the economy.
Nikkei du Japon .N225 jumped 1.4%.
Future E-Mini for the S&P 500 SC1 added 0.2%, with investors focusing on Tuesday’s US presidential election.
New coronavirus-induced lockdowns in Europe and parts of the United States have raised concerns about the outlook for fuel consumption, sending Brent LCOC1 to a low of $ 35.74 per barrel, a level not seen since the end of May. US crude fell to $ 33.64. [O/R]
Global coronavirus cases topped 500,000 last week, with Europe crossing the grim milestone of 10 million infections in total. The UK grapples with more than 20,000 new cases a day, while a record increase in cases in the US kills up to 1,000 people a day.
“Markets look to the fourth quarter and early 2021, where growth prospects appear bleak given the shift to tighter lockdowns in Europe,” Perpetual analysts wrote in a note.
According to them, a -1% impact on European growth would lower global gross domestic product by 0.5% over the next 12 months.
“The key question here is how long the lockdowns are needed to bring the virus under control.”
Disappointing outlook and results for some of Wall Street’s biggest companies last week, including Apple AAPL.O and Facebook FB.O, further worsened the mood and lowered US stocks last week. [.N]
In foreign currencies, the Australian dollar is sensitive to risk AUD = D3 slipped 0.4% to below 70 cents US for the first time since July. It was the last at $ 0.7002.
Japanese yen JPY = was slightly higher at 104.73 per dollar, while the British pound GBP = was the latest 0.3% lower at $ 1.2907. The euro EUR = slipped to $ 1.1635.
That left the dollar index, which measures the greenback against a basket of peers, barely changed at 94.12. = USD
A resumption of risk after the US election, however, could see the dollar resuming its fall from March highs, analysts said.
JPMorgan analysts said the market likely views a Biden win as “neutral in the short term” but “negative in the long term” because his expected fiscal policy outweighs the benefits of a broad stimulus package.
“SPX may have an advantage at ~ 3400, but it would have a bigger disadvantage depending on the details of the package, potentially at ~ 2500,” they added.
Friday, the S&P 500 .SPX lost 1.21% to close at 3269.96. The Nasdaq composite .IXIC fell 2.45% while the Dow .DJI fell 0.6%.