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Asian Stocks Down, Regional COVID-19 Outbreaks Unnerve Investors

Stock MarketsAug 02, 2021 10:55PM ET
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By Gina Lee

Investing.com – Asia Pacific stocks were mostly down on Tuesday morning, as the spread of the Delta variant of COVID-19 in the region’s key markets soured risk sentiment.

Japan’s Nikkei 225 fell 0.91% by 10:47 PM ET (2:47 AM GMT). Data released earlier in the day said the Tokyo core consumer price index (CPI) grew 0.1% year-on-year in July, while the Tokyo CPI contracted 0.1% year-on-year. Tokyo's CPI excluding food and energy grew 0.2% month-on-month in July.

South Korea’s KOSPI edged down 0.14%. with the country’s CPI growing a better-than-expected 2.6% year-on-year in July. The Bank of Korea also released the minutes from its latest Financial Stability Board meeting.

In Australia, the ASX 200 was down 0.26%. Australian building approvals contracted 6.7% month-on-month in June, while private house approvals fell 11.8% in the same month.

Hong Kong’s Hang Seng Index fell 0.88%. China’s Shanghai Composite was down 0.30% while the Shenzhen Component jumped 2.25%.

The Reserve Bank of Australia will hand down its policy decision for August later in the day, with the Bank of England following on Thursday and the Reserve Bank of India on the following day.

The global spread of COVID-19, and its Delta variant, continues to be of concern to investors. China has seen cases spread to inland cities from the coast, with restrictive measures re-implemented to curb the latest outbreak. Investors also continue to monitor shares in China and Hong Kong, as China continues to tighten regulation in sectors including technology and private education.

"It's a challenging time for Asian equities with the uncertainty that has been created by the regulatory measures... there was some handholding from the China Securities Regulatory Commission (CSRC) last week to limit the spread of the contagion and counter the popular thinking of which sector is next. That worked for a few days but then we saw the flows start to reverse again,” BNP Paribas (OTC:BNPQY) Asset Management head of Asian equities Zhikai Chen told Reuters.

Meanwhile, U.S. data released on Monday that was robust but softer also soured investor sentiment. The manufacturing purchasing managers index (PMI) was a better-than-expected 63.4 in July, while the Institute of Supply Management (ISM) manufacturing PMI was a lower-than-expected 59.5. The ISM manufacturing employment index was a better-than-expected 52.9 in July.

Meanwhile, the debate on when the U.S. Federal Reserve will begin asset tapering and hike interest rates continues. Fed Governor Christopher Waller said he could back an asset tapering announcement by September 2021 should the next two monthly U.S. employment data show continued gains.

Investors now look to the latest U.S. jobs report, including non-farm payrolls, due on Friday, to gauge the labor market’s recovery. But for some, it was a matter of priorities.

“I don’t think the market is concerned about the Delta variant as much as it’s concerned about how it impacts inflation... the longer we have Delta spread globally, the longer the supply chain disruptions will continue,” Spotlight Asset Group chief investment officer Shana Sissel told Bloomberg.

Asian Stocks Down, Regional COVID-19 Outbreaks Unnerve Investors
 

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