Asian stocks were on the defensive, as oil prices edged down 1 Monday as investors were cautious ahead of a US presidential debate and coronavirus cases rose again in a blow to hopes of a global economic recovery.
The largest MSCI index of Asia-Pacific stocks outside of Japan added 0.04% to 547.79, not too far from a two-month low of 543.66 reached last week.
The index is expected to end the month in the red after three straight monthly gains as the pandemic continues to wreak economic havoc around the world and sparks investor concern over extremely high valuations.
Of particular concern is the resurgence of COVID-19 cases in Europe, stifling earlier hopes that authorities could have begun to exercise some control over the outbreak and increasing pressure on businesses already struggling with losses.
Japan’s Nikkei rose 0.65%, partly on a lower yen, while South Korea’s KOSPI index gained 0.8%.
Australia’s main stock index slipped 0.2% as investors were cautious despite positive news on the coronavirus front with new infections in the country’s second most populous state, Victoria, and allowing authorities alleviate some of the mobility restrictions.
New Zealand’s benchmark was 0.6% lower.
“Clouds have started to gather in the developed world as political uncertainty grows in the United States and Europe grappling with a resurgence of COVID-19 cases”, Kerry Craig, Global Market Strategist, JP Morgan Asset Management.
COVID-19 cases are approaching 33 million globally, with 992,470 dead, as Europe has seen an increase in new infections.
“While governments are reluctant to reintroduce nationwide lockdowns, local and sectoral restrictions can last for some time, restricting economic activity,” added Craig.
Encouragingly, data over the weekend showed Chinese industrial company profits rose for the fourth consecutive month in August, in part thanks to a rebound in prices for raw materials and equipment manufacturing.
Investors will then focus on the first debate between US President Donald Trump and his rival Joe Biden on Tuesday before the November election.
A strong performance in Tuesday’s debate by Biden, who currently has a modest lead in betting and polls, could boost global trade and renewables-related stocks, while a perceived victory by Trump could benefit businesses from fossil fuels and defense.
There will also be a focus on the progress of a new US budget support package, while investors will also closely follow UK-Europe trade talks after Brexit as they unfold. that they continue this week.
In currencies, the dollar hovered near a two-week high against the Japanese yen at 105.56.
The euro was last at $ 1.1631, not far from a two-month low of $ 0.1611 hit on Friday.
The British pound rose 0.1% to $ 1.2760.
The risk-sensitive Australian dollar held steady at $ 0.7041 after falling for six straight sessions as odds narrowed on the prospect of further easing of monetary policy in the country.
The kiwi barely changed at $ 0.6552.
In commodities, oil prices were under pressure as renewed mobility in various countries to contain a resurgence of coronavirus cases obscures the prospects for a recovery in fuel demand.
US Brent crude slipped 11 cents to $ 41.81 a barrel while US light crude fell 20 cents to $ 40.05.
Gold held at $ 1,860.5, still far from an all-time high above $ 2,000 per ounce hit in August
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