Global shares slipped on Thursday as investors locked in recent gains amid rising concerns about resurgent coronavirus infections and after the United States’ treasury secretary dashed any remaining hopes of a stimulus package before the November 3 election.
European shares were lower, with the pan-European Euro Stoxx50 falling 2.2 percent. MSCI’s broadest index of Asia-Pacific shares outside Japan lost 0.2 percent while Japan’s Nikkei 225 dropped 0.5 percent and the Shanghai Composite fell 0.3 percent.
US S&P 500 futures sagged 0.25 percent in Asian trading after key US stock indices ended the previous session lower, with the S&P 500 closing down 0.7 percent and the Nasdaq Composite Index shedding 0.8 percent.
The New York FANG Plus index of the top US tech firms has struggled to rise above the record peak it hit in September as investors lacked the conviction to test new highs.
“My gut feeling is that many investors are aware that those growth shares have been bought excessively, and that the US election could change the driver of the market,” said Kenji Hashizume, senior fund manager at Sumitomo Mitsui DS Asset Management in Hong Kong.
Glimmers of hope?
But some Asian stocks bucked the broader market losses.
Hong Kong and Singapore announced they plan to establish an air travel bubble between the two cities, in which travellers with negative COVID-19 test results would be allowed to fly without restrictions on the purpose of their travel or quarantines.
The news sent shares of Hong Kong-based carrier Cathay Pacific soaring by 5 percent. Singapore Airlines shares were up 0.3 percent. The key stock indices in Hong Kong and Singapore fell 1.96 percent and 1.2 percent, respectively.
Concerns that a resurgence in the coronavirus pandemic could lead governments to again shut down economies spurred profit-taking.
With COVID-19 cases surging, some European nations are closing schools, cancelling surgery and enlisting student medics as overwhelmed authorities brace for a repeat of the nightmare scenario seen earlier this year.
That helped push the yield on the German 10-year Bund – a benchmark government bond – to as low as minus 0.586 percent, a rate last seen in May.
Downbeat comments from US Treasury Secretary Steven Mnuchin that a stimulus deal was unlikely before the November 3 vote provided another excuse for profit-taking, analysts said.
Still, many investors expect large fiscal stimulus after the election, which Democratic presidential candidate Joe Biden is increasingly expected to win.
Although Biden has been seen as more likely to raise taxes on corporate profits and capital gains, investors are also pointing to other potential benefits of a Biden presidency, such as less global trade uncertainty.
“It smacks of opportunism when markets were saying just a few months ago stocks would crash if Trump would lose and now they say a Biden victory would be good for stocks,” said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities. “What this suggests is that markets are flush with cash after massive monetary [stimulus] by global central banks.”
In currencies, the British pound was firmer at $1.3017, having climbed 0.6 percent on Wednesday on hopes of progress in talks between the United Kingdom and the European Union.
But some of the enthusiasm was lost after British Prime Minister Boris Johnson told the head of the European Commission, Ursula von der Leyen, that he was disappointed there had not been more progress in the talks.
The Australian dollar shed 0.5 percent to $0.7128 after the country’s central bank stoked speculation of a near-term cut in interest rates.
The need for further Australian stimulus was underlined by data showing 29,500 jobs were lost in October while the unemployment rate rose slightly to 6.9 percent.
Oil prices rose slightly after US crude stockpiles fell last week, adding to 2 percent gains overnight, as oil-exporting cartel OPEC and its allies were seen fully complying in September with their pact to curb output.
US West Texas Intermediate (WTI) crude futures picked up 0.1 percent to $41.07 per barrel while Brent crude futures rose 0.1 percent to $43.34 per barrel.