Asia stocks fall after Wall Street sell-off as coronavirus worries grow; STI down 1.5%

Japan's Nikkei index declined 1.1 per cent. PHOTO: AFP

SYDNEY (BLOOMBERG) - Asian stocks dropped on Thursday (June 25) after a tumble on Wall Street, where worries about a surge in virus cases in multiple US states spurred a flight from riskier assets.

Japan's Nikkei index declined 1.2 per cent while both South Korea's Kospi and Australia's S&P/ASX 200 Index fell 1.6 per cent.

Singapore's Straits Times Index was down 1.5 per cent at 10:08am local time.

Markets in China and Hong Kong are closed on Thursday for holidays.

Futures on the S&P 500 dipped 0.3 per cent as of 9.01am in Tokyo. The index fell 2.6 per cent on Wednesday.

Florida and California set daily records for new cases, while Houston said its intensive care unit beds are at 97 per cent capacity. New York, New Jersey and Connecticut are requiring visitors from virus hot spots to self-quarantine. The tech-heavy Nasdaq Composite fell for the first session in nine.

Market sentiment is rapidly turning more negative on concern that the spreading coronavirus could force policymakers to slow the pace or reverse business reopenings. At the same time, there's the potential for trade tensions to resurface between the European Union and the US.

"Clearly the market really got the shivers over the prospect of a big increase in Covid and maybe starting to see places that were opening up have to close up, pressing the economy and lowering the prospects for the stock market," Margie Patel, portfolio manager at Wells Fargo Asset Management, said on Bloomberg TV. "We've had such a great run from the end of March it's only inevitable that we should get at least a little step back on the way to higher prices over the course of the year."

The White House is weighing new tariffs on US$3.1 billion of exports from France, Germany, Spain and the UK. The US Trade Representative wants to impose new tariffs on European exports like olives, beer, gin and trucks, while increasing duties on products including aircraft, cheese and yogurt, according to a notice published late on Tuesday evening. The EU is also debating whether to keep the door shut to American travellers this summer.

Elsewhere, the International Monetary Fund downgraded its outlook for the world economy, projecting a significantly deeper recession and slower recovery than it anticipated just two months ago.

Crude oil retained Wednesday's losses. West Texas Intermediate crude was little changed at US$38.01 a barrel.

Gold, which has been climbing as a safe haven, was at US$1,762.22 an ounce, up 0.1 per cent.

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