Asian shares struggle to shake off US selloff

Asian shares struggle to shake off US selloff amid coronavirus resurgence

US indices fell sharply to open the week's trading

Representative Image. Credit: Reuters Photo

Asian markets look set to continue a downward path on Tuesday after soaring global coronavirus cases and shrinking hopes for a US stimulus deal took a toll on Wall Street and drove up the US dollar.

Australia's ASX 200 opened down about 0.6 per cent, while Japan's Nikkei 225 futures were up 0.04 per cent. The Nikkei 225 index closed down 0.09 per cent on Monday. The futures contract was down 0.25 per cent from that close​.

Hong Kong's Hang Seng index futures were up 0.1 per cent.

MSCI's gauge of stocks across the globe was down 1.52 per cent.

US indices fell sharply to open the week's trading, as anxiety over new record daily Covid-19 cases in the United States, Russia and France weighed on investor appetite.

And while House Speaker Nancy Pelosi is still hopeful an agreement can be reached on a coronavirus relief bill before the Nov. 3 elections, White House economic adviser Larry Kudlow told reporters on Monday that talks have slowed.

"The challenge for markets is that in most cases they are already pricing a very strong economic bounce. The new outbreaks, and the potential for a double-dip recession, directly contradict this assumption," Michael McCarthy, chief market strategist at CMC Markets in Sydney.

The sharp decline set a bleak tone ahead of a busy third-quarter earnings season, with large US tech firms like Apple Inc, Amazon.com Inc and Google-parent Alphabet Inc set to report. Microsoft Corp reports its results Tuesday.

The Dow Jones Industrial Average fell 650.19 points, or 2.29 per cent. The S&P 500 lost 64.42 points, or 1.86 per cent, while the Nasdaq Composite dropped 189.35 points, or 1.64 per cent.

Renewed coronavirus fears drove investors into a host of safe-haven investments and away from riskier assets, including in the oil market. Brent dropped $1.31, or 3.1 per cent, while US West Texas Intermediate (WTI) fell $1.29, or 3.2 per cent. Both contracts fell almost 2.5 per cent last week.

Investors shedding risk gave way to a rise in the safe-haven US dollar compared to other currencies. The dollar index rose 0.286 per cent, with the euro down 0.45 per cent to $1.1806. Spot gold added 0.1 per cent to $1,902.02 an ounce.

Longer-term US Treasury yields also fell, with the benchmark 10-year yield down 4.3 basis points in afternoon trading at 0.7977 per cent, well below its four-month high reached on Friday.