Asian stocks and U.S Stock futures slumped Thursday morning as rising caseloads of COVID-19 in parts of America and China dampened hopes of a quick global economic recovery from the most damaging disease ever to hit the human race.
“This tightening will likely negatively impact the economic recovery,” Goldman Sachs analysts said of authorities’ moves to lock down parts of the Chinese capital in response to the current outbreak.
S&P 500 mini futures dropped about 1.2% in at Asia’s trading session while the MSCI’s broadest index of Asia-Pacific shares excluding Japan dropped as much as 1% in value.
In addition, Japan’s Stock Index Nikkei 225 lost 1.3% while in China, Chinese blue-chip index CSI300 shares also lost about 0.1% in early trade.
In America, the S&P 500 dropped 0.36% yesterday, however, the tech powerhouse index Nasdaq kept its record-breaking momentum by adding 0.15% due to hopes of increased demand for various online services such as online video streaming, remote working and cloud-based services due to the epidemic that had restricted human activities globally.
Meanwhile, China’s announced cancellation of flights, shut educational institutions and sealed off some neighborhoods as it increased efforts to limit COVID-19 resurgence that had strengthened fears around Asia’s economic tiger.
“It is a big shock to markets that China, which appears to have successfully quashed the disease, is seeing a second wave. And in the U.S. we see record cases in many states,” said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities.
“All this suggests that the more you re-start the economy, the more infections you have. People have thought the economy will quickly recover in July-September after dismal April-June. But that is now becoming uncertain.”
Global Investors according to reports from Reuters rushed to the safety of U.S bonds, with the 10-year U.S. Treasuries yield dropping by 3 basis points to 0.704%.