Asian stocks under pressure as coronavirus cases rise

SYDNEY (Reuters) – Asian equities on Monday were on the defensive as rising COVID-19 cases and doubts about vaccine makers’ ability to deliver promised doses on time soured risk appetite.

MSCI’s broader index of Asia Pacific stocks outside of Japan just changed to 718.72.

The benchmark is below the record high of 727.31 it hit last week, but so far up 8.5% in January, on track for its fourth consecutive monthly rise.

Japan’s Nikkei fell 0.1%.

Australian quotas have risen after the country’s drug regulator approved the Pfizer / BioNTech COVID-19 vaccine with authorities saying a phased rollout will begin late next month.

Global cases of COVID-19 are approaching 100 million with more than 2 million deaths, even as financial markets have supported hopes for a vaccine and a quick economic revival.

However, “there was one negative COVID-19 news after another Friday that equity investors ultimately couldn’t ignore,” said Ray Attrill, head of forex strategy at National Australia Bank.

Hong Kong blocked an area of ​​the Kowloon Peninsula on Saturday, the first such measure the city has taken since the start of the pandemic, while some countries, including Mexico, had the highest number of daily cases.

Reports that the UK’s new COVID variant was not only highly infectious but possibly even more deadly than the original strain also added to concerns.

In the European Union, political leaders have expressed widespread dismay at AstraZeneca and Pfizer Inc’s delay in delivering the promised doses, with the Italian prime minister lashing out at vaccine suppliers, saying the delays amount to a serious breach of contractual obligations.

Pfizer last week said it was temporarily slowing supplies to Europe to make manufacturing changes that would increase production. On Friday, AstraZeneca said initial deliveries to the region will be lower due to a manufacturing glitch.

Investors saw some hope in the United States after lawmakers agreed on Sunday that the most important priority should be the efficient production and distribution of a vaccine.

Democrats and Republicans are discussing new $ 1.9 trillion in US coronavirus aid.

Financial markets have witnessed massive US economic stimulus, although the disagreements have meant months of indecision in a country suffering more than 175,000 cases of COVID-19 a day with millions of people out of work.

On Friday, the Dow was down 0.57%, the S&P 500 fell 0.30%, and the Nasdaq Composite gained 0.09%. The three major US indices closed higher during the week, with the Nasdaq up more than 4%.

Jefferies analysts said that US equity markets looked overvalued even though they remained bullish.

“For the stock market to take a bad turn, rather than just a bull market correction, there has to be a catalyst,” analyst Christopher Wood said.

“That means either an economic recession or a material tightening in Fed policy,” Wood said, adding that neither would likely happen quickly.

In currencies, major pairs got caught in a range as markets awaited a US Federal Reserve meeting on Wednesday.

The dollar index remained unchanged at 90.21, with the euro at $ 1.2169, while the pound was last traded at $ 1.3683.

The Japanese yen remained unchanged at 103.77 per dollar.

Acute risk sentiment saw Treasury yields drop on Friday ahead of some record-sized bond auctions and the Fed meeting.

In commodities, oil prices fell with Brent down 7 cents to $ 55.34 a barrel and US crude 5 cents to $ 52.22.

Gold was higher with spot prices up 0.2% to 1,855.9 per ounce.

Montage by Sam Holmes