Asia-Pacific markets set to trade lower as worries remain over impact from coronavirus pandemic

SINGAPORE — Asia-Pacific markets were set to trade lower on Friday as traders remained cautious over short-term economic impact of the coronavirus as cases around the world continue to increase.

Australia’s benchmark ASX 200 was down 0.14% in early trade, with the financials, materials and energy subindexes struggling for gains and shares of major banks slipped.

Nikkei futures pointed to a lower open in Japan.

The session in Asia follows a tepid finish overnight where U.S. stocks closed slightly higher as traders increased their exposure to major technology names. Sentiment on Wall Street received a boost after lawmakers agreed to resume negotiations over a potential new Covid-19 relief bill. Still, U.S. futures fell in overnight trading.

“Markets remain cautious, balancing a very positive medium-term outlook on well-founded vaccine hopes, against the current resurgence of the virus which has seen a number of new restrictions being imposed in the US,” said Tapas Strickland, director of economics and markets at the National Australia Bank, in a morning note.

The coronavirus pandemic, which has infected more than 56 million people and caused major disruptions to the world economy, has also pushed global debt levels to a new high. The Institute for International Finance said global debt levels rose over $272 trillion in the third quarter and was expected to reach $277 trillion by the end of the year, representing a debt-to-GDP ratio of 365%.

In Europe, there is growing worry that a $2 trillion stimulus plan will not be delivered as quickly as planned after tweaks made to the deal last month was opposed by Hungary and Poland. Brexit negotiations have also been suspended after reports said an EU negotiator tested positive for the coronavirus.

“A lack of agreement on fiscal stimulus in the US and Europe reduces the likelihood of economic stimulus from this channel putting more pressure on central banks to deliver,” said Kishti Sen, an economist at ANZ, in a morning note.

Currencies and oil

The dollar index, which measures the U.S. dollar against a basket of its peers, last traded at 92.329, retreating from levels near 93.00 in the previous week.

Analysts have said that the dollar is caught between optimism surrounding promising vaccine news and the rapid rise in coronavirus cases around the world forcing countries to reimplement localized shutdowns.

The Japanese yen traded near flat at 103.81 versus the dollar while the Australian dollar changed hands at $0.7274, dipping from an earlier high of $0.7288.

Oil prices traded lower Friday morning during Asian hours: U.S. crude was down 0.38% at $41.58 while global benchmark Brent also shed 0.38% to $44.17.

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