HONG KONG, Jan 5 — Most Asian markets reversed early losses today as hopes for the economic outlook trumped worries over a coronavirus surge, new lockdowns, a slow vaccine rollout and uncertainty over US Senate elections.
While analysts are broadly upbeat about the long-term outlook this year, the nascent inoculation programmes have yet to have an impact, meaning the first few months of the year will likely be bumpy.
And the task ahead was laid bare by data showing almost 280,000 Americans were infected in one day, while the country’s death toll passed 300,000.
And as a new, potentially more transmissible strain rampages around the world, governments are being forced to tighten containment measures again, with England going into a six-week full lockdown after officials warned hospitals could soon face collapse.
Such measures are fuelling concerns the already stuttering economic recovery could be jolted off course in the first quarter, while the rollout of vaccines has been slower than hoped, adding to the market jitters.
“The first quarter will no doubt be tough; the spread has been horrific throughout the festive period and restrictions are being tightened and extended,” said Craig Erlam, senior market analyst at OANDA.
“The toll on the economy will be significant but, thanks to the vaccine, consigned mostly to the first quarter.”
All three main indexes on Wall Street fell more than one per cent, having ended 2020 at or near record highs, with dealers there also keeping tabs on runoff senate elections in Georgia, which will decide the balance of power in the upper house of Congress.
Both Democratic candidates hold narrow leads going into the vote today, and observers said there are concerns on trading floors that a win for the party would give them control of Capitol Hill and power to pass market-unfriendly measures such as tax hikes and tighter regulation.
Markets have been buoyed in recent months by the prospect of Republicans holding the Senate and providing a check on the Democrats but analysts said a “blue wave” scenario has spooked investors.
“If the Democratic Party... (controls) both houses, we could see an equity market correction, especially if investors worry that such checks and balances around tax and tech regulation will disappear,” said Axi strategist Stephen Innes.
However, Gorilla Trades strategist Ken Berman added: “Most analysts agree that a Democratic sweep would pose a risk for stocks, but with all the positive trends in mind, it’s unlikely that bulls will have to deal with anything more than an orderly correction.”
Light at end of the tunnel
Asian equities struggled early today but many managed to bounce back.
Hong Kong was among those that shifted from red to green, helped by news that the New York Stock Exchange had abandoned plans to delist three state-owned Chinese telecom companies.
The move reversed a weekend decision that further dented already strained relations between the world’s two superpowers.
Jackson Wong, at Amber Hill Capital, said: “Some funds that had an obligation to unload these shares will now need to buy them back.
“Some investors are also starting to pricing in a scenario that the decision to halt delistings could be a start of a de-escalation in tensions between China and the US.”.
The three firms all rallied, having tumbled yesterday. China Unicom was up nearly nine per cent, while China Mobile and China Telecom each rose more than six per cent.
Shanghai also rose, along with the yuan.
There were also gains in Sydney, Seoul, Mumbai, Taipei, Jakarta, Bangkok and Wellington, though Tokyo, Singapore and Manila fell.
Analysts said while there were lingering virus concerns, traders remain upbeat about the future.
“The light at the end of the tunnel is there for all to see and it grows brighter by the week,” said Berman.
“There have been setbacks — new variants, for example — which are undoubtedly a blow and there may be more. But as things stand, there’s plenty of reason for optimism this year, which will make a nice change compared to the one we’ve just slammed the door shut on.”
Oil prices edged up slightly but remained under pressure from immediate worries about demand as containment measures go into force, while dealers were also fretting after a meeting of Opec and other top producers ended without agreement on new output levels for next month.
Bitcoin was sitting at US$32,400 (RM129,859.20) after seeing recent wild swings, that saw it hit a record near US$35,000 before diving to US$28,000 within the space of a day. — AFP
Source: Malay Mail
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