HONG KONG (Reuters) – Asian stocks increased losses on Tuesday, extending a pullback from multi-year highs reached last week over fears that a highly contagious new strain of COVID-19 hitting Britain could lead to a slower global economic recovery.
Sentiment continues to sour with FTSE futures at 0.14% and E-mini futures for the S&P 500 index at 0.29%, even as Congress approved a long-awaited $ 892 billion coronavirus aid package on Monday.
The Australian S & P / ASX 200 was down 1.21%. Japan’s Nikkei 225 fell 0.77% in the afternoon session to hit its lowest level in two weeks as investors benefited from tremendous gains in recent months.
“Any sale probably won’t generate much resistance. The clients I speak to are more likely to bring in some profit than to bring in more money, ”said John Milroy, investment adviser at Ord Minnett, a stock broker in Sydney.
The MSCI measure for Asia-Pacific equities outside Japan fell 0.75%. Hang Seng Index fell further 0.63% and China’s benchmark CSI300 Index fell 0.35%.
“An escalation of European COVID-19 restrictions in response to fears surrounding a new variant, which is expected to spread more quickly, should and should, of course, trigger a negative response from prices through the short-term global growth impact,” said Stephen Innes, Chief Global Market Strategist at Axi.
Illiquid conditions will persist at the end of the year, but such dips could be an opportunity to fade earlier than anything else, he said.
Countries around the world closed their borders to Britain on Monday over fears of a new form of coronavirus, which is said to be up to 70% more transmissible than the original, causing travel chaos and increasing the prospect of food shortages days before Great Britain. Britain will start leaving the European Union.
The discovery of the new strain, just months before vaccines are expected to be widely available, renewed fears about the virus, which has killed about 1.7 million people worldwide. As a result, European stocks fell during their worst session in nearly two months on Monday.
The British pound fell a whopping 2.5% to $ 1.3190 due to concerns about the virus. Against a basket of currencies, the dollar is on track to a third straight quarterly loss, falling 12.5% from a three-year peak in March.
Oil prices fell on expectations of lower demand, with US crude recently falling 0.34% to $ 47.63 a barrel, while Brent was down 0.55% at $ 50.63.
Spot gold rose 0.1% to $ 1,878.15 an ounce, with the safe-haven asset hitting a month high earlier in the session.
Reporting by Kane Wu in Hong Kong; additional reporting by John McCrank in New York; Editing by Sam Holmes