Asian markets struggle after report dashes hope of vaccine
Equities battle while gold and bonds are firmer as a sceptical report casts doubt over early positive results from Covid-19 vaccine trial
Washington — Asian stocks struggled to extend the week’s rally on Wednesday and gold and bonds firmed as a sceptical press report dented some of the hope for a Covid-19 vaccine and the concern about bumps in the global recovery from the pandemic returned.
MSCI’s broadest index of Asia-Pacific shares outside Japan was flat. The risk-sensitive Australian dollar retreated from an overnight two-month high and safe-haven demand drove US treasury yields back under 0.7%.
The moves follow a downbeat end to the day on Wall Street, after a report from medical news website Stat cast doubt over positive early results from a Moderna Covid-19 vaccine trial. The report said the results, which had rallied global stocks this week, lacked detail.
Chinese stocks began the day a little lower and Hong Kong’s Hang Seng slipped 0.1%. Australia’s benchmark was flat while a soft yen helped the Nikkei 0.7% higher.
“This is probably more of a stabilisation than anything else, because markets have rallied hard on opening up and the potential for a V-shaped recovery,” said Jun Bei Liu, a portfolio manager at Tribeca Investment Partners.
“The market is a little bit directionless ... from here on, it certainly feels like we will see a lot more poor economic data,” she said, with investors likely to take their strongest cues from company outlook commentaries and confidence surveys.
Two-thirds of 223 fund managers surveyed by Bank of America say recent gains are a bear-market rally.
S&P 500 futures were last up 0.5% after wobbling around flat through the morning. Oil was steady and benchmark 10-year yields on US treasuries dipped 1.5 basis points to 0.6964%. Yields fall when prices rise.
Gold rose slightly to $1,750.19/oz.
Doubts about the outlook held back commodity prices from further gains, as more bad news poured forth.
Japanese business confidence slumped to a decade low as the economy entered recession while Australian retail sales suffered their steepest ever dive in April. British jobless claims are at their highest in 20 years.
And the US economy will not recover its lost ground until sometime after next year, the non-partisan congressional budget office said on Tuesday.
Brent crude futures steadied at $34.73 a barrel, having rallied nearly 7% this week, and US crude held at $31.97 a barrel.
“While countries have started to relax restrictions on economic and social activities, economies will not return to where things were before the outbreak,” a strategist at Singapore’s DBS bank said in a note.
“Geopolitical tension, especially between the US and China, have also returned and are likely to intensify into the US elections in November.”
In currency markets, the euro remained supported in the afterglow of a Franco-German proposal for a common relief fund — a possible way through tensions between EU members. It inched up to $1.0938.
Other majors steadied, while the Aussie and kiwi battled, mostly without success, to break out of the ranges that have held them for months.