- Asian equities snap two-day gains amid fresh risk aversion wave.
- US-China, Aussie-Sino trade tussle join concerns for the second wave of the coronavirus amid economic re-open.
- China inflation figures add to the market’s worries, drug updates seem to propel the recent pullback in sentiment.
With the risk-off sentiment at its full steam, Asian equities drifted lower ahead of the European session on Tuesday. In doing so, the share traders pay a little heed to the recent news concerning upbeat outcomes of the coronavirus (COVID-19) drug trials.
While trade tension surrounding the US-China and the Aussie-Sino relations has earlier weighed on the risk-tone sentiment, fears of the second wave of virus outbreak recently dragged the risks down. The latest trade updates suggest that US President Donald Trump shut the door for renegotiation of Phase 1 deal terms while China banned imports of meat from Australia.
Elsewhere, the fresh increase in virus numbers from Germany, Wuhan and the US are some of the latest red signals concerning the pandemic. Though, the news that the Favipiravir phase 3 clinical trial initiated in India and Remdesivir becomes the most effective anti-coronavirus drug so far tried to calm the traders by the press time.
Even so, MSCI’s index of Asia-Pacific shares outside Japan drop over 1.0% to snap the previous two-day gains while Japan’s NIKKEI bounces back from the early-day negative zone to 20,410, up 0.11%, by the time of writing.
Stocks in China register close to 0.50% losses, despite the recent pullback, as headline CPI and the factory-gate inflation, PPI, slipped beneath forecasts in April. On the other hand, New Zealand’s NZX 50 also rises 0.67% but not Australia’s ASX 200 whereas India’s BSE SENSEX and NIFTY 50 are losing over 1.5% and 2.75% respectively as we write.
Given the trade/virus updates be the key for near-term direction, markets may pay a little attention to the second-tier data. However, US CPI for April, expected 0.80% YoY versus 1.5% prior, can act as a buffer.
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