Asian stocks trade mixed as China PMIs jostle with coronavirus headlines
- Asian shares take clues from upbeat China PMIs but fail to ignore virus fears.
- Numbers in Italy, Spain and the UK have started weakening but lockdown concerns are still high.
- World Bank predicts 24 million people to struggle with poverty in East Asia and the Pacific.
Asian equities remain mostly positive, cheering a mild recovery in the global coronavirus (COVID-19) hot-spots and upbeat China PMIs, while heading into the European open on Tuesday. Even so, risk-tone remains challenged on concerns that the pandemic leaves millions in poverty.
In its report on Monday, the World Bank warned of “substantially higher risk” among households that depend on industries particularly vulnerable to the impact of Covid-19, per the Bloomberg. The report also cited fears for the East Asia and Pacific (EAP) region while projecting a slowdown of EAP growth to 2.1%, 0.5% worst-case scenario, versus 5.8% growth projected for 2019. It was additionally mentioned in the report that China’s GDP could drop from 6.1% of 2019 to 2.3% during the current year.
On the positive side, US President Donald Trump’s ruling out of national lockdown joins China’s surprisingly upbeat official PMI data. However, fresh lockdowns in Indonesia and extended stay-at-home in Italy recently weighed on the trade sentiment.
While portraying the market’s risk-tone, the US 10-year treasury yields seesaw in the minor positive territory around 0.70% whereas MSCI’s index of Asia-Pacific shares outside Japan drops 1.60%. Further, Japan’s NIKKEI reverses the early-day gains and declines 1.20% to 18,870 by the press time whereas stocks in China are flashing near 1.0% gains at the time of writing.
Additionally, Indian share indices rise more than 2.0% currently as traders await the second tranche of government stimulus while ignoring growth outlook cut by S&P and Fitch. Furthermore, Australia’s ASX 200 drops 2.0% to 5,080 as positive data from China cuts odds favoring the additional stimulus from the largest customer. Though, New Zealand’s NZX 50 remains 1.0% positive amid hopes of recovery from the disease.
Looking forward, a heavy economic docket in the West could keep global traders busy but COVID-19 headlines are less likely to lose their importance.