Asian stocks follow Wall Street lower as stimulus hopes fade

AP – Asian stocks followed Wall Street lower yesterday as hopes United States (US) leaders will agree on a new economic stimulus before the November 3 Presidential election faded.
Benchmarks in Shanghai, Tokyo and Hong Kong declined. Sydney advanced.

Wall Street’s benchmark S&P 500 index closed down 0.7 per cent on Wednesday after US Treasury Secretary Steven Mnuchin said he and congressional leaders were “far apart” on new aid for the struggling US economy. Consumer spending, the main US economic engine, weakened after earlier additional unemployment benefits expired.

Mnuchin “added another nail to the coffin on pre-election stimulus,” Jingyi Pan of IG said in a report.

The Shanghai Composite Index lost 0.1 per cent to 3,337.51 and the Nikkei 225 in Tokyo fell 0.5 per cent to 23,517.63. The Hang Seng in Hong Kong lost 1.2 per cent to 24,370.76.

The S&P-ASX 200 in Sydney gained 0.8 per cent to 6,230.10. New Zealand, Singapore and Jakarta also retreated.

Thailand’s benchmark lost one per cent after the government declared a “severe state of emergency” following a rally on Wednesday of thousands of protesters demanding democratic change, the third major gathering by activists.

Thai police dispersed a group of pro-democracy protesters yesterday who had camped out overnight outside the office of the prime minister to demand his resignation. Police said they had arrested 20 people.

Currency traders at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea. PHOTO: AP

Mnuchin and House of Representatives Speaker Nancy Pelosi talked by phone on Wednesday but reached no agreement, according to Pelosi aide Drew Hammill. Mnuchin said it would be difficult to complete an agreement before next month’s Presidential election.

On Wall Street, companies that rely on consumer spending, banks and technology and communication stocks bore the brunt of the selling.

The S&P 500 fell to 3,488.67. The Dow Jones Industrial Average lost 0.6 per cent to 28,514. The Nasdaq composite slid 0.8 per cent to 11,768.73.

Investors are swinging between optimism about a possible coronavirus vaccine that helped to propel an earlier market rally and unease about lacklustre US economic activity.

Major US companies have begun reporting quarterly earnings this week.

Bank of America sank 5.3 per cent after its revenue fell short of analysts’ forecast. Wells Fargo dropped six per cent after its earnings were lower than Wall Street expected.

The Federal Reserve has indicated that it will keep interest rates at nearly zero for a while to support the economy, even if inflation hits its target level.

In energy markets, benchmark US crude gained USD0.07 to USD41.11 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, used to price international oils, added USD0.06 to USD43.38 per barrel in London.

The dollar gained to JPY105.26 from Wednesday’s JPY105.15. The euro declined to USD1.1750 from USD1.1753.