Asian shares struggle to shake off U.S. selloff amid coronavirus comeback

By Pete Schroeder

(Reuters) – Asian markets look set to continue a downward path on Tuesday after soaring global coronavirus cases and shrinking hopes for a U.S. stimulus deal took a toll on Wall Street and drove up the U.S. dollar.

Australia’s ASX 200 () opened down about 0.6%, while Japan’s () were up 0.04%. The Nikkei 225 index () closed down 0.09% on Monday. The futures contract was down 0.25% from that close​.

Hong Kong’s Hang Seng index futures () <.hsic1> were up 0.1%.

MSCI’s gauge of stocks across the globe was down 1.52%.

U.S. indices fell sharply to open the week’s trading, as anxiety over new record daily COVID-19 cases in the United States, Russia and France weighed on investor appetite.

And while House Speaker Nancy Pelosi is still hopeful an agreement can be reached on a coronavirus relief bill before the Nov. 3 elections, White House economic adviser Larry Kudlow told reporters on Monday that talks have slowed.

“The challenge for markets is that in most cases they are already pricing a very strong economic bounce. The new outbreaks, and the potential for a double-dip recession, directly contradict this assumption,” Michael McCarthy, chief market strategist at CMC Markets in Sydney.

The sharp decline set a bleak tone ahead of a busy third-quarter earnings season, with large U.S. tech firms like Apple Inc (O:), Amazon.com Inc (O:) and Google-parent Alphabet Inc (O:) set to report. Microsoft Corp (O:) reports its results Tuesday.

The Dow Jones Industrial Average () fell 650.19 points, or 2.29%. The S&P 500 () lost 64.42 points, or 1.86%, while the Nasdaq Composite () dropped 189.35 points, or 1.64%.

Renewed coronavirus fears drove investors into a host of safe-haven investments and away from riskier assets, including in the oil market. dropped $1.31, or 3.1%, while U.S. West Texas Intermediate () fell $1.29, or 3.2%. Both contracts fell almost 2.5% last week.

Investors shedding risk gave way to a rise in the safe-haven U.S. dollar compared to other currencies. The rose 0.286%, with the euro () down 0.45% to $1.1806. added 0.1% to $1,902.02 an ounce.

Longer-term U.S. Treasury yields also fell, with the benchmark 10-year yield down 4.3 basis points in afternoon trading at 0.7977%, well below its four-month high reached on Friday.