Asian stocks stumbled on Friday afternoon, reversing earlier gains as the rise in COVID-19 cases in China heightened investor concerns about the prospects for a global economic recovery.
European stock markets were to open lower. Pan-regional Euro Stoxx 50 futures fell 0.66% at the start of trading, while German DAX futures fell 0.65% and FTSE futures fell 0.35%.
Earlier on Friday, an Asian regional stock index had nearly hit record highs after US President-elect Joe Biden proposed a $ 1.9 trillion stimulus package to jumpstart the world’s largest economy and accelerate its response to COVID-19.
In prime-time remarks, Biden presented a proposal that includes $ 415 billion for the COVID-19 response, some $ 1 trillion in direct assistance to households and about $ 440 billion for small businesses and communities hit hard by the pandemic.
But that initial boost faded in the afternoon as risk appetite waned, pushing up bond prices and the dollar and hitting regional stocks.
Some analysts were skeptical of whether Biden would be able to persuade Congress to approve all of his proposals.
New President Joe Biden today proposed an additional fiscal stimulus worth $ 1.9 trillion, or nearly 9% of [gross domestic product], but we suspect that while Democrats now tightly control the Senate as well, any package ultimately passed by Congress will be half that size or less, ”said Paul Ashworth, chief U.S. economist at research firm Capital Economics , in a note sent to Al Jazeera.
Global stocks initially rose Thursday on a report that said the stimulus package could reach $ 2 trillion, far more than markets expected.
When the doves analyze
Biden’s comments came after Federal Reserve Chairman Jerome Powell struck an accommodating tone in his comments during a virtual symposium with Princeton University.
Powell said the US central bank was not raising interest rates anytime soon and dismissed suggestions that the Fed could start reducing its purchases of short-term bonds.
The MSCI’s largest Asia-Pacific stock index outside of Japan was last down 0.59%.
Chinese blue chips lost 0.97% amid concerns over increasing COVID-19 cases in China and after the Chinese central bank drained liquidity from the country’s banking system, suggesting it may try to curb excessive lending and borrowing.
More than 28 million people are locked up in China. On Friday, he reported the highest number of new COVID-19 cases in more than 10 months.
Hong Kong’s Hang Seng fell 0.29% and Australia’s ASX 200 was flat, while Japan’s Nikkei fell 0.65% after hitting a 30-year high in the previous session .
The falls in Asia echoed a late fall on Wall Street on Thursday. While US stocks spent most of the trading session in positive territory, helped by hopes of a stimulus, concerns about the cost of the package led to a slight dip towards the end of Wall Street trading.
Futures on S&P 500 e-mini fell 0.61% to 3,768.
“The problem is what this is going to mean from a tax standpoint,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.
“The expenses are easy to do, but the question is, how are you going to pay them? Markets often ignore politics, but they don’t often ignore taxes.
Focus on security
The Dow Jones Industrial Average fell 0.22%, the S&P 500 fell 0.38% and the Nasdaq Composite fell 0.12%.
Corporate earnings season will be in full swing on Friday with results from JPMorgan, Citigroup and Wells Fargo.
In the currency market, the US dollar was stable against the yen at 103.79 and the dollar index edged up 0.1% to 90.35.
The euro fell 0.16% to $ 1.2136.
Yields on US government bonds fell as investor appetite for relatively riskier assets such as stocks waned. Yields fall as bond prices rise when investors buy debt securities. Benchmark 10-year Treasuries gave 1.1005%, against a US close of 1.129% on Thursday, while the 30-year yield fell to 1.8409% from 1.874%.
Oil prices, which had risen on a weak dollar and strong Chinese import data, fell as concerns over COVID-19 in China hit sentiment.
Brent crude oil futures fell 0.83%, to $ 55.95 a barrel, while US crude fell 0.54% to $ 53.28.
The spot price of gold, seen as a safe haven in times of uncertainty, rose 0.11% to $ 1,848.36 per ounce.