A rally in equities lost some of its steam in Asia as traders weighed up the latest signs of a slowdown in the spread of coronavirus against its catastrophic impact on business and economic activity globally.
Japan’s Topix stock index dropped 1.6 per cent, putting a three-day run of consecutive gains under threat. China’s CSI 300 of Shanghai- and Shenzhen-listed shares edged 0.3 per cent higher.
Elsewhere in Asia-Pacific trading, Sydney’s S&P/ASX 200 index added 2.4 per cent while South Korea’s Kopsi rose 1.2 per cent.
Mixed signals in Asian trading reflected the challenge of interpreting the latest data around the pandemic, market participants said.
Investors this week have cautiously embraced the possibility that the so-called coronavirus curve is flattening and the virus is spreading more slowly, boosting global stock prices.
“I think everybody’s focusing on the Covid curves — that seems to be the new risk barometer”, said Stephen Innes, chief global market strategist at AxiCorp, referring to the rate at which the virus spreads.
On Wall Street, stocks rallied on Wednesday after new cases in the US rose 8.1 per cent, the fifth straight day that the rate of increase has slowed. The S&P 500 closed 3.4 per cent higher, taking its gains for the week to almost 11 per cent.
In the US, support for equity prices had fed through into credit markets. The largest high-yield bond exchange traded fund — known by its ticker HYG — rose 2.6 per cent overnight having also climbed on Monday and Tuesday. The US 10-year treasury yield was 3 basis points lower at 0.74 per cent in Asian trading on Thursday.
S&P 500 futures tipped the Wall Street benchmark to rise 0.3 per cent when US trading begins later in the day, while FTSE 100 futures signalled a 0.9 per cent rise.
Signs of a slowdown in new coronavirus cases in Europe this week, alongside news that Austria, Denmark and the Czech Republic would ease restrictions over the coming weeks, had boosted optimism. But uncertainty over the future trajectory of the virus meant that trading has been tempered by caution.
“Markets don’t have enough concrete data that’s probably reliable enough to make heads or tails or it, so [they are] getting driven by sentiment,” said Mr Innes.
Elsewhere, oil prices rose ahead of a meeting between Saudi Arabia and Russia on Thursday, which has raised hopes of a deal to curb production and underpin sliding prices.
G20 oil ministers are set to meet on Friday as part of efforts to find measures to support an industry where demand has fallen sharply on the back of the coronavirus outbreak.
Brent crude, the international benchmark, added 0.2 per cent to $32.9 per barrel, giving up most of its gains from earlier on Thursday morning.