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HONG KONG (Reuters) – Asian stocks fell on Tuesday as the variant of the Delta coronavirus spread to key markets in the region and put Chinese authorities on high alert, shaking investor confidence.
Trade in Asia faced a weaker lead from Wall Street after investors there considered the impact the growing number of global cases of Delta could have on global economic growth.
In Asia, the largest MSCI index of Asia-Pacific equities excluding Japan fell 0.40% at the start of the session.
Japan’s Nikkei was down 0.85% at the start of trading.
China’s blue-chip CSI300 index fell 0.80% while Hong Kong’s Hang Seng index fell 0.83%.
Australia’s benchmark, the S & P / ASX200, is down 0.25%, hitting a record high on Monday after Square Inc announced a $ 29 billion offer for buy-it-now company Afterpay Ltd.
The Reserve Bank of Australia is expected to leave rates unchanged at 0.10% at its meeting later today, but reverse the July bond cut decision due to lockdowns in Sydney and Brisbane caused by the variant Delta expanding.
In China, the spread of the Delta variant from the mainland coast to its inland cities has prompted authorities to implement strict epidemic control measures to bring the outbreak under control.
“Millions of people have been stranded in China following the worst outbreak since the start of the COVID crisis and given the risks to supply chains this could have more effect on the global economy” said Elizabeth Tian, director of equity derivatives solutions at Citigroup.
Adding to this negative sentiment is continued investor concern over increased official Chinese regulation in sectors ranging from tech, fintech and education.
“It is a difficult time for Asian equities with the uncertainty created by regulatory measures,” said Zhikai Chen, head of Asian equities at BNP Paribas Asset Management.
“The China Securities Regulatory Commission (CSRC) took some action last week to limit the spread of contagion and counter popular thinking that the industry is next. It worked for a few days and then we saw the flows start to reverse again.
“From the perspective of global investors, to some extent they envision choosing a fairly robust earnings season in the US and Europe and there is a question in the market when looking at Asia and is like ‘do we need to be there’ right now. ..there is a short-term recalibration of risk appetite. “
Despite struggles in China’s tech sector, electric vehicle maker Li Auto launched its main dual listing in Hong Kong on Tuesday, which will raise up to $ 1.9 billion, according to its exchange documents.
The Dow Jones Industrial Average fell 0.28%, the S&P 500 lost 0.18% and the Nasdaq Composite added 0.06%.
The benchmark 10-year Treasury yield fell 5.5 basis points to 1.1839% in afternoon trading, continuing a downtrend since spring.
The yield hit 1.151%, the lowest since July 20, shortly after an Institute for Supply Management report showed U.S. manufacturing growth in July slowed for the second month. consecutive. {nL1N2P92DT]
In US trade, oil fell between 3.3% and 3.6%, which, according to Commonwealth Bank analysts, was the result of the Delta variant being seen “as an obstacle to the recovery of the market. the demand for oil “.
Oil did start to rise slightly at the start of Asian trading, however.
US crude rose 0.31% to $ 71.46 per barrel. Brent crude was 0.32% at $ 73.15 a barrel. Gold was slightly lower.
Spot gold was trading down 0.1% at $ 1,812.4352 an ounce.
Reporting by Scott Murdoch in Hong Kong; Editing by Sam Holmes
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