Asian shares, US stock futures and oil prices slipped on Thursday as surging US coronavirus cases, global trade tensions and an International Monetary Fund downgrade to economic projections dented confidence in a recovery.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.7 percent, Tokyo’s Nikkei share index slumped 1.4 percent, and Australia’s ASX 200 tumbled 1.8 percent. US stock futures also declined 0.7 percent following on from an overnight slide on Wall Street.
Markets in Hong Kong and mainland China were closed for public holidays on Thursday.
Florida, Oklahoma and South Carolina reported record increases in new coronavirus cases on Wednesday. Seven other states had record highs earlier in the week, and Australia posted its biggest daily rise in infections in two months.
The governors of New York, New Jersey and Connecticut ordered travellers from nine other states to quarantine on arrival, a worry for investors who had mostly been expecting an end to pandemic restrictions.
Texas is also facing a “massive outbreak” and authorities are considering localised restrictions, Governor Greg Abbott said in a television interview.
Market sentiment is rapidly turning more negative on concern that the spreading coronavirus could force policymakers to slow the pace or reverse business re-openings.
“We’ve had such a great run from the end of March it’s only inevitable that we should get at least a little step back on the way to higher prices over the course of the year,” Margie Patel, portfolio manager at Wells Fargo Asset Management, told Bloomberg.
Australian airline Qantas said on Thursday it does not expect sizeable international operations until at least July 2021, as the carrier announced plans to sack a fifth of its workforce and raise $1.3bn to stay afloat.
The IMF said it now expects a deeper global recession, with output to shrink 4.9 percent this year, much sharper than the 3.0 percent contraction predicted in April.
“There is a little bit of ‘reality bites’ coming,” said Damian Rooney, senior instructional salesman at stockbroker Argonaut in Perth.
“I don’t think there was a particular straw that broke the camel’s back, but people are a little bit twitchy – there are a lot of reasons to be pretty cautious.”