Shanghai/New York — Asian shares fell on Thursday and US treasury yields ticked lower as investors fretted over the slow pace of US stimulus talks and a surge in global cases of Covid-19.

Global investor sentiment took a fresh hit over talks to boost the world’s largest economy after US President Donald Trump on Wednesday accused Democrats of being unwilling to craft an acceptable compromise on stimulus, following reports of progress earlier in the day.

It remains unclear whether stimulus negotiations would continue ahead of the US presidential and congressional elections on November 3.

“We still think that this deal will remain elusive in the sense that this amount that we are talking about, $1.88-trillion, that’s about 9% of GDP, and 2.2-trillion, which is speaker [Nancy] Pelosi’s package, is even higher at around 10% of GDP,” said Anthony Chan, chief Asia investment strategist at Union Bancaire Privee (UBP) in Hong Kong.

“Even if both sides do manage to reach an agreement, given the tight deadline ahead of the election it’s unlikely that something like that would be able to go through the Senate smoothly.”

In morning trade, MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.63%.

Australian shares gave up 0.6%, Seoul’s Kospi was off 0.59% and Chinese blue-chips dropped 1.1%.

The Nikkei was 0.69% lower.

Uncertainty over the passage of a bill to stimulate a pandemic-ravaged economy comes as the US faces a new wave of Covid-19 cases.

Nearly two-thirds of US states were in a danger zone of coronavirus spread and six, including election battleground Wisconsin, reported a record one-day increase in Covid-19 deaths on Wednesday.

Against the backdrop of stimulus talks and the spread of the novel coronavirus, Wall Street’s three major averages closed lower on Wednesday after a choppy trading session.

The Dow Jones Industrial Average inched lower by 0.35%, while the S&P 500 lost 0.22%. The tech-heavy Nasdaq Composite dropped 0.28%.

On Thursday, the dollar was 0.11% higher against the yen at 104.67, while the euro notched down 0.19% to $1.1839.

But against a basket of major peers, the dollar appeared relatively unaffected by setbacks to stimulus talks, trading only slightly higher at 92.784.

“Markets are now pricing in a strong likelihood of a [Joe] Biden presidency, perhaps even a clean sweep of Congress, and this is weighing on the USD, as they view a less confrontational trade environment. They will also probably be factoring in a large fiscal stimulus early next year, with none of the holdup that is currently preventing a deal,” Rob Carnell, chief economist at ING in Singapore said in a note.

The yield on benchmark US 10-year treasury notes ticked down to 0.8108% from a US close of 0.816% on Wednesday.

In commodity markets, oil prices dropped, adding to sharp losses overnight, after higher US gasoline inventories pointed to a deteriorating outlook for fuel demand as coronavirus cases soar.

US West Texas Intermediate crude futures fell 0.6% to $39.79 a barrel and Brent crude futures were 0.48% lower at $41.358 a barrel.



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