Asian shares stumbled lower in afternoon trade on Friday, reversing earlier gains as rising COVID-19 cases in China reinforced investor concerns over the prospects for a global economic recovery.
European bourses were set to open lower. Pan-region Euro Stoxx 50 futures dropped 0.66 percent in early trade, while German DAX futures lost 0.65 percent and FTSE futures dipped 0.35 percent.
Earlier on Friday, an Asian regional share index had edged near record highs after United States President-elect Joe Biden proposed a $1.9 trillion stimulus plan to jump-start the world’s largest economy and accelerate its response to COVID-19.
In prime-time remarks, Biden outlined a proposal that includes $415bn aimed at the COVID-19 response, some $1 trillion in direct relief to households, and roughly $440bn for small businesses and communities hard hit by the pandemic.
But that initial boost faded by the afternoon as risk appetite waned, lifting bond prices and the dollar, and hitting regional equities.
Some analysts were sceptical as to whether Biden would be able to persuade Congress to approve the full set of his proposals.
“Incoming President Joe Biden has today proposed an additional fiscal stimulus worth $1.9 trillion, or close to 9 percent of [gross domestic product], but we suspect that, even though the Democrats now narrowly control the Senate too, any package eventually passed by Congress will be half that size or less,” Paul Ashworth, chief US economist at research firm Capital Economics, said in a note sent to Al Jazeera.
Global stocks had initially risen on Thursday on a report that the stimulus package could be as large as $2 trillion, much more than markets were expecting.
When doves analyse
Biden’s comments came after Federal Reserve Chair Jerome Powell struck a dovish tone in comments at a virtual symposium with Princeton University.
Powell said the US central bank is not raising interest rates anytime soon and rejected suggestions the Fed might start reducing its bond purchases in the near term.
MSCI’s broadest index of Asia-Pacific shares outside Japan was last down 0.59 percent.
Chinese blue chips shed 0.97 percent amid worries over rising COVID-19 cases in China, and after the Chinese central bank drained liquidity from the country’s banking system, suggesting it might be trying to rein in excessive lending and borrowing.
More than 28 million people are under lockdown in China. On Friday, it reported the highest number of new COVID-19 cases in more than 10 months.
Hong Kong’s Hang Seng fell 0.29 percent and Australia’s ASX 200 was flat, while Japan’s Nikkei lost 0.65 percent after touching a 30-year high in the previous session.
The falls in Asia echoed a late dip on Wall Street on Thursday. While US stocks spent most of the trading session in positive territory, helped by the stimulus hopes, concerns over the cost of the package led to a modest decline towards the end of Wall Street trade.
S&P 500 e-mini futures shed 0.61 percent to 3,768.