Asian Shares Dip On Economic Recovery Concerns

Asian stocks fell broadly on Thursday, with concerns over rising coronavirus infections and a cautious outlook from the U.S. Federal Reserve weighing on sentiment.

Chinese shares fell as the U.S. suspended its extradition treaty with Hong Kong in a series of measures that escalate tensions between Washington and Beijing.

Meanwhile, China’s central bank today kept its benchmark lending rate for corporate and household loans steady, as expected, for the fourth straight month, but pumped cash into the banking system via reverse repos to maintain reasonable and ample liquidity in the banking system.

The benchmark Shanghai Composite Index slumped 44.23 points, or 1.3 percent, to 3,363.90, while Hong Kong’s Hang Seng Index tumbled 387.52 points, or 1.5 percent, to 24,791.39.

Japanese shares closed lower after the most recent FOMC policy meeting minutes showed Fed officials were not positive about additional monetary easing. The Nikkei 225 Index fell 229.99 points, or 1 percent, to 22,880.62, while the broader Topix closed 0.9 percent lower at 1,599.20.

Market heavyweight SoftBank fell over 2 percent and Fast Retailing dropped 1 percent. Exporters ended mixed despite a weaker yen. Automaker Honda Motor declined 2.3 percent, Toyota Motor shed 1.5 percent and Nissan Motor dropped 1.1 percent.

In the tech space, Advantest plunged 3.6 percent, Tokyo Electron gave up 3.3 percent and Screen Holdings plummeted 5.2 percent.

Australian markets fell notably as Qantas posted an annual loss of almost A$2 billion and speculation mounted that Treasurer Josh Frydenberg could block Chinese buyer Mengniu Dairy Company’s expansion in Australia.

The benchmark S&P/ASX 200 Index dropped 47.60 points, or 0.8 percent, to 6,120, while the broader All Ordinaries Index ended down 42.40 points, or 0.7 percent, at 6,271.70.

Qantas Airways ended on a flat note. Energy companies tumbled as oil prices slipped on concerns over risks to the demand recovery.

Santos and Origin Energy lost 5-6 percent after reporting a dip in underlying profits. Woodside Petroleum declined 2.6 percent and Oil Search gave up 3.2 percent.

Miner South32 eased half a percent after it reported an 80.5 percent nosedive in full-year underlying profit. Heavyweights BHP and Rio Tinto ended down 0.9 percent and 0.4 percent, respectively.

Gold miners Evolution Mining, Northern Star Resources and Newcrest Mining fell around 2 percent.

Technology stocks gained ground, with Afterpay surging 6.8 percent after upgrading its annual core earnings guidance.

Seoul stocks plunged the most in two months as the country reported 288 more virus cases and officials warned of a new wave of the novel coronavirus. The benchmark Kospi plunged 86.32 points, or 3.7 percent, to 2,274.22.

Shares of Ssangyong Motor jumped 6.9 percent after reports that a U.S. automotive distribution company may submit a binding offer to acquire a stake in the South Korean automaker next month.

New Zealand shares ended lower, with the benchmark NZX 50 Index falling 89.13 points, or 0.8 percent, to 11,662.16 after Reserve Bank of New Zealand Assistant Governor Christian Hawkesby said the implications of Covid-19 were not yet over and the central bank is considering taking the cash rate into negative territory for the first time ever.

Auckland International Airport rose 0.9 percent despite the country’s biggest airport operator posting a huge fall in full-year profit.

Markets in Malaysia and Indonesia were closed for the Islamic New Year.

U.S. stocks ended lower overnight while the dollar rose as investors reacted to the lack of inflationary comments, downbeat economic outlook and negative comments about yield curve control in minutes from the Federal Reserve’s latest policy meeting.

The minutes of the Fed’s July meeting noted that the coronavirus outbreak is causing tremendous human and economic hardship across the United States and around the world, and that economic activity as well employment remain well below their levels at the beginning of the year.

The Dow Jones Industrial Average dropped 0.3 percent, the tech-heavy Nasdaq Composite Index shed 0.6 percent and the S&P 500 eased 0.4 percent.

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