Asian stocks opened the week under a cloud as investors adopted a more defensive stance amid fears over the continuing spread of the coronavirus pandemic.
Japan’s Nikkei fell 2.1 per cent, while the Hang Seng dropped 1.3 per cent and the SSE Composite shed 0.8 per cent in a cautious start to the new week’s trading.
Read more: Global coronavirus death toll tops 500,000
The falls in Asian stocks came after Wall Street’s retreat on Friday, after a surge in infections left several US states questioning their reopening plans.
That led to concerns that the pace of economic recovery might have been exaggerated.
Fiona Cincotta of City Index said: “Markets have kicked off the week in a depressed mood amid gloomy coronavirus developments, overshadowing vaccine developments and encouraging data from China.
“As the number of cases worldwide reaches 10m and the death toll strikes 500,000, concerns over rising coronavirus cases and second wave fears continue to drive risk sentiment.
“California’s governor has ordered the immediate closure of all bars in seven counties, with eight other counties advised to implement similar closures”.
Safe haven investments have been the obvious beneficiary of the return to caution, with gold prices hitting their highest prices since 2012.
However, oil prices trimmed some gains last week and slid further this morning. Rising fears over a second wave paused the two-month rally which has seen the commodity regain about 50 per cent of its losses this year.
The FTSE 100 and European stocks are set to follow Asian stocks down when trading begins.
It is an important week on the economic data front, with PMIs, UK GDP and US payrolls as well as Federal Reserve Chair Jerome Powell speaking tomorrow.
“Whilst data is expected to show that the worst is behind us, a double dip recession could well be on the cards if lockdowns are widely re-imposed”, Cincotta said.