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Asia shares turn lower as recovery concerns resurface

EconomyJan 15, 2021 01:20AM ET
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© Reuters. FILE PHOTO: Screen displays Nikkei share average and stock indexes outside a brokerage in Tokyo

By Andrew Galbraith and Chibuike Oguh

SHANGHAI/NEW YORK (Reuters) - Asian shares stumbled lower in afternoon trade on Friday, reversing earlier gains as rising COVID-19 cases in China reinforced investor concerns over the prospects for a global economic recovery.

European bourses were set to open lower. Pan-region Euro Stoxx 50 futures dropped 0.66% in early trade, while German DAX futures lost 0.65% and FTSE futures dipped 0.35%.

Earlier on Friday, an Asian regional share index had edged near record highs after U.S. President-elect Joe Biden proposed a $1.9 trillion stimulus plan to jump-start the world's largest economy and accelerate its response to COVID-19.

In prime-time remarks, Biden outlined a proposal that includes $415 billion aimed at the COVID-19 response, some $1 trillion in direct relief to households, and roughly $440 billion for small businesses and communities hard hit by the pandemic.

But that initial boost faded by the afternoon as risk appetite waned, lifting bond prices and the dollar, and hitting regional equities.

"When you get to these lofty levels, what does it need to take (the market) higher again?" said Stephen Innes, chief global markets strategist at Axi.

"Ultimately, the market has excelled itself. I'm not saying it's gotten too far over its skis, I don't think it has, but I think the expectations for economic repricing are quite dramatic ... (we're) back again to the lack of economic conviction."

Global stocks had initially firmed on Thursday on a report that the stimulus package could be as big as $2 trillion, much more than markets were expecting.

Biden's comments came after Federal Reserve Chair Jerome Powell struck a dovish tone in comments at a virtual symposium with Princeton University.

Powell said the U.S. central bank is not raising interest rates anytime soon and rejected suggestions the Fed might start reducing its bond purchases in the near term.

MSCI's broadest index of Asia-Pacific shares outside Japan was last down 0.59%.

Chinese blue-chips shed 0.97% amid worries over rising COVID-19 cases in China, and after the Chinese central bank drained liquidity from the country's banking system, suggesting a tightening bias in monetary policy.

More than 28 million people are under lockdown in China. On Friday it reported the highest number of new COVID-19 cases in more than 10 months.

Hong Kong's Hang Seng fell 0.29% and Australia's ASX 200 was flat, while Japan's Nikkei lost 0.65% after touching three-decade highs in the previous session.

The falls in Asia echoed a late dip on Wall Street on Thursday. While U.S. stocks spent most of the trading session in positive territory, helped by the stimulus hopes, concerns over the cost of the package led to a modest decline toward the end of Wall Street trade.

S&P 500 e-mini futures shed 0.61% to 3,768.

"The concern is what it's going to mean from a tax stand point," said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.

"Spending is easy to do but the question is how are you going to pay for it? Markets often ignore politics but they don't often ignore taxes."

The Dow Jones Industrial Average fell 0.22%, the S&P 500 lost 0.38%, and the Nasdaq Composite dropped 0.12%.

On Friday, earnings season will kick into full swing with results from JPMorgan (NYSE:JPM), Citigroup (NYSE:C) and Wells Fargo (NYSE:WFC). Investors will be looking to see if banks are starting to take down credit reserves, resume buybacks, and provide guidance that shows the economy is improving, said Thomas Hayes, chairman of Great Hill Capital in New York.

In the currency market, the U.S. dollar was flat against the yen at 103.79 and the dollar index edged 0.1% higher to 90.35.

The euro fell 0.16% to $1.2136.

U.S. yields stepped back as risk appetite waned. Benchmark 10-year Treasury notes yielded 1.1005%, down from a U.S. close of 1.129% on Thursday, while the 30-year yield dipped to 1.8409% from 1.874%.

Oil prices, which had risen on a weak dollar and strong Chinese import data, dropped as COVID-19 concerns in China hit sentiment.

Brent crude oil futures fell 0.83%, to $55.95 a barrel while U.S. crude lost 0.54% to $53.28.

Spot gold rose 0.11% to $1,848.36 per ounce.

Asia shares turn lower as recovery concerns resurface
 

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Comments (19)
William Smith
William Smith Jan 15, 2021 9:19AM ET
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They sold off on Biden's epic fail as he taxes folks in Red States to bale out bankrupt Blue States budgets. The most corrupt tax move by a president in history. d
Elvis Durant
Elvis Durant Jan 15, 2021 2:28AM ET
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Oh Reuters...... nice try!!! 🤦🏽‍♂️🤦🏽‍♂️🤦🏽‍♂️🤦🏽‍♂️
Patrecia Sapulette
Patrecia Sapulette Jan 15, 2021 2:02AM ET
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straight to the comments, Reuters is pretty messed up. misleading.
yves newman
yves newman Jan 15, 2021 2:02AM ET
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Your comment is more credible than the entire article
Kaveh Sun
Kaveh Sun Jan 15, 2021 1:42AM ET
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30” ago reuters wrote asian market is up on Biden stimmi. Lol @ Reuters for making ‘news’
Ricardo Diogo
Rcd72 Jan 15, 2021 12:34AM ET
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the plan is to try to cover the holes...stocks ancrypto silliness will get taxed because they are mocking the pain of large majority of the population especially the North Americans
Sabi Sab
SabiSab Jan 15, 2021 12:07AM ET
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Indices futures have told Biden already his stimulus package *****  Try harder!
Notvery Goodathis
Peteymcletey Jan 14, 2021 11:59PM ET
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For one, the stimulus was lower than expected.second - stop with all this spending!!!!
perplexed76 .
perplexed76 . Jan 14, 2021 11:59PM ET
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not lower, previous one was just 900 billions. I think financial gamblers just suspecting where Biden will get all money needed from.
KZ CC
KZ CC Jan 14, 2021 11:59PM ET
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perplexed76 . The dollar is going up so I guess the market wanted 3 T
Steven Jacobs
Steven Jacobs Jan 14, 2021 11:59PM ET
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I like people who ask “where is the money coming from” as if they are the ones paying for this themselves. If we have billions to give away to other countries then we have billions or even trillions to give OUR own country.
Benjamin Hernandez
Benjamin Hernandez Jan 14, 2021 11:55PM ET
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can everybody just relax and spend some time with the magic dragon.
perplexed76 .
perplexed76 . Jan 14, 2021 11:46PM ET
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time to put taxes on too-big-to-fall monsters. Stop living with national debt tumor
Ian Kander
Ian Kander Jan 14, 2021 11:44PM ET
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What were they smoking when they wrote this. I dont see one green indicies
Ludovic Raymond
Ludovic Raymond Jan 14, 2021 11:44PM ET
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It looks to me the markets has priced this in, no?
Kaveh Sun
Kaveh Sun Jan 14, 2021 11:20PM ET
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No matter how Reuters try to spin, all r in the red, down not up
Frag Carole
Frag Carole Jan 14, 2021 11:17PM ET
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China has never slowed down, she is a unified and glorified behemoth. First digital currency that will bypass the West and Swift system.
perplexed76 .
perplexed76 . Jan 14, 2021 11:17PM ET
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unconrtollable china will eat itself
Casador Del Oso
Casador Del Oso Jan 14, 2021 10:13PM ET
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more oxygen for the patient on life support
Johnny Crash
Johnny Crash Jan 14, 2021 10:06PM ET
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OK, so the fed will keep buying Tesla......
Ronald Warren
Ronald Warren Jan 14, 2021 9:45PM ET
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This is the first Biden rally to burn out! Are we headed down or just options expiration Friday?
Nick Johnson
Nick Johnson Jan 14, 2021 9:00PM ET
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We do not want or need another stimulus.  Just open up the economy and let everyone start living their lives again.
perplexed76 .
perplexed76 . Jan 14, 2021 9:00PM ET
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ok, but if you get covid,we will throw you to the nearest ditch because hospitals will be ovefilled
Nick Johnson
Nick Johnson Jan 14, 2021 9:00PM ET
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I already had COVID and recovered from it.  It is no a relevant threat to anyone unless they are obese or have other existing health conditions.
Ludovic Raymond
Ludovic Raymond Jan 14, 2021 9:00PM ET
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Nick Johnson Thank you for the medical expertise here. Looks a little more complicated than this; there are nearly 400k people who did not recover: with or without medical pre-condition, younger and older than you
Raymond Huggard
Raymond Huggard Jan 14, 2021 8:42PM ET
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Markets will correct to 2500 basis points.
alkesh kumar
alkesh kumar Jan 14, 2021 8:42PM ET
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which one ?
Nicholas Segalle
Nicholas Segalle Jan 14, 2021 8:42PM ET
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Yes
Mario tragik
Mario tragik Jan 14, 2021 8:04PM ET
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lol everything is dropping , selling the news. mkts knew this already
Tommy Arencibia
Tommy Arencibia Jan 14, 2021 8:04PM ET
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Reuters makes up chit
Ludovic Raymond
Ludovic Raymond Jan 14, 2021 8:04PM ET
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Exactly
Ludovic Raymond
Ludovic Raymond Jan 14, 2021 8:04PM ET
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Ludovic Raymond Already factored in by the markets
alkesh kumar
alkesh kumar Jan 14, 2021 7:56PM ET
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USA market seems hopeless even with stimulas news, Asian Market so excited ...inces up in hope of stimulas...what a joke...
 
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