SYDNEY – Asian shares skidded on Tuesday on growing worries about a second wave of coronavirus infections after the Chinese city where the pandemic originated reported its first new cases since its lockdown was lifted.
The central Chinese city of Wuhan reported five new cases on Monday, casting doubts over efforts to lower coronavirus-related restrictions across the country as businesses restart and individuals went back to work.
MSCI’s broadest index of Asia Pacific shares outside of Japan stumbled more than 1 percent, snapping two straight sessions of gains.
Hong Kong’s Hang Seng index was among the hardest hit, down 1.4 percent followed closely by Australia, off 1.3 percent. Chinese shares dithered in early trade with the blue-chip CSI300 index off a shade. South Korea’s KOSPI faltered 0.9 percent.
As countries around the world gradually ease restrictions in an effort to restart their economies, investors are becoming anxious about a second wave of infections.
Germany’s Robert Koch Institute reported that the “reproduction rate” – the number of people each person infected with the coronavirus goes on to infect – had risen to 1.1. Any rate above 1 means the virus is spreading exponentially.
The worrisome news follows a fresh outbreak in night clubs in South Korea and record number of new cases in a day in Russia.
“The re-opening of the global economy will likely follow the shape of activity in China. Businesses there have restarted operations but are not necessarily at capacity,” Bob Baur, Chief Global Economist at Principal Global Investors.
“While businesses have mostly restarted, China’s households stay cautious. Restaurants are open, but seats are empty. Vehicle sales bounced off the bottom but are well below normal. Households in the US and Europe will surely mirror this wary attitude even as activity picks up.”
Fund managers expect equity markets to stay the course through June and avoid retesting March lows given the massive monetary stimulus provided by the US Federal Reserve and other major central banks.
Late on Monday, the Fed said it would start purchasing shares of exchange-traded funds that invest in bonds, one of several tools to improve market functioning in the wake of the coronavirus pandemic.
Markets are also keeping a wary eye on China’s trade relations with the United States as well as Australia.
