Stocks are mostly lower in Asia after pandemic concerns snapped a four-day winning streak on Wall Street
Shares were mostly lower in Asia on Wednesday after pandemic concerns snapped a four-day winning streak on Wall Street.
On Tuesday, independent monitors paused enrollment in a study testing the COVID-19 antiviral drug remdesivir plus an experimental antibody therapy being developed by Eli Lilly. The company said the study was paused “out of an abundance of caution.” The news followed a disclosure late Monday by Johnson & Johnson, which said it had to temporarily pause a late-stage study of a potential COVID-19 vaccine “due to an unexplained illness in a study participant.”
Meanwhile, uncertainty about the prospects for more stimulus for the economy from Washington continues to hang over markets.
“As U.S. case counts heads north into October, the market is evidently still very much sensitive to the twist and turns of the vaccine development and perhaps now more than ever still lacking another fiscal injection to plug the gap into the year-end,” Jingyi Pan of IG said in a commentary.
Japan’s Nikkei 225 erased early losses to gain 0.2% to 23,645.81 while the Hang Seng in Hong Kong gave up 0.2% to 24,608.27. South Korea’s Kospi lost 0.7% to 2,386.54 and the S&P/ASX 200 in Australia declined 0.2% to 6,185.30. The Shanghai Composite index shed 0.4% to 3,346.53.
The Bank of Korea opted to keep its benchmark interest rate unchanged.
Overnight, the S&P 500 lost 0.6% to 3,511.93, giving back some of its gains from a day earlier.
The Dow Jones Industrial Average dropped 0.6% to 28,679.81 and the Nasdaq composite gave up an early gain, slipping 0.1% to 11,863.90. The Russell 2000 index of small-cap stocks fell 0.7%, to 1,636.85.
Stocks have been mostly pushing higher this month. Already the major stock indexes have recouped their losses from September’s market swoon. But many forces are pushing and pulling on markets simultaneously.
The International Monetary Fund, in its latest update, forecast a steep fall in international growth this year as the global economy struggles to recover from the pandemic-induced recession, its worst collapse in nearly a century.
The IMF said Tuesday it expects the global economy to shrink 4.4% in 2020. That would be the worst annual plunge since the Great Depression of the 1930s. The world economy contracted by a far smaller 0.1% after the devastating 2008 financial crisis.
The scale of disruptions in hard-hit economic sectors, notably restaurants, retail stores and airlines, suggests that without an available vaccine and effective drugs to combat the virus, many areas of the economy “face a particularly difficult path back to any semblance of normalcy,” the IMF said.
Meanwhile, another heavy dose of stimulus for the U.S. economy is looking increasingly unlikely. Senate Majority Leader Mitch McConnell said Tuesday that he’s scheduling a vote on a scaled-back GOP coronavirus relief bill for Oct. 19. Democrats filibustered a GOP-drafted aid bill last month and recent talks on a larger deal with House Speaker Nancy Pelosi, D-Calif., fell apart this past weekend. In a letter to colleagues Tuesday, Pelosi called the White House’s latest proposal insufficient and said significant changes are needed.
Still, several companies kicked the earnings season off on Tuesday with better-than-expected reports. JPMorgan Chase, Johnson & Johnson, Citigroup and BlackRock all reported stronger results for the summer than analysts had forecast.
Overall, however, Wall Street is expecting another sharp drop in profits for the third quarter, nearly 21% for S&P 500 earnings per share from a year earlier. But if that proves correct, it would not be as bad as the nearly 32% plunge for the spring, according to FactSet.
In other trading Wednesday, the yield on the 10-year Treasury was steady at 0.73%, up from 0.72% late Tuesday.
Benchmark U.S. crude oil lost 17 cents to $40.03 per barrel in electronic trading on the New York Mercantile Exchange. It gained 77 cents to $40.20 per barrel on Tuesday. Brench crude, the international standard, also gave up 17 cents, to $42.29.
The U.S. dollar weakened to 105.39 Japanese yen from 105.47 yen. The euro slipped to $1.1743 from $1.1748.
AP Economics Writer Martin Crutsinger contributed.