Asian Shares Slide as Rising Virus Cases Haunt Reopenings

Asian shares tumbled Thursday as reports of rising numbers of coronavirus infections in many countries raised fears over risks from reopenings from pandemic shutdowns.

Asian markets had been expected to track Wall Street’s retreat after the Federal Reserve signaled a long path to recovery from the devastation of the coronavirus pandemic.

But fresh news on the virus front pulled benchmarks still lower. Futures for the S&P 500 dropped 1.7% and the Dow industrials future contract lost 2.1%.

In the U.S., Texas and Florida were among the states reporting jumps in the number of coronavirus cases after precautions were relaxed last month. The total number of U.S. cases has surpassed 2 million.

Globally, India reported a record number of nearly 10,000 new coronavirus cases over the past 24 hours, with health services in the worst-hit cities of Mumbai, New Delhi and Chennai becoming swamped by the rising infections.

In South Korea, the latest 45 new cases came in a weekslong resurgence that health authorities said they fear will develop into a massive wave.

Such developments have raised alarm, said Stephen Innes of AxiCorp.

“After all, a secondary outbreak is nothing to sneeze at as traders remain in a state of risk limbo watching risk assets for signs of continuation or stall,” Innes said in a commentary.

Japan’s benchmark Nikkei 225 sank 2.8% to 22,472.91, while Australia’s S&P/ASX 200 skidded 3.1% to 5,960.60.

South Korea’s Kospi dropped 0.9% to 2,176.78 and Hong Kong’s Hang Seng slipped 2% to 24,556.72. The Shanghai Composite shed 0.8% to 2,920.90.

Overnight, stocks ended a bumpy day mostly lower on Wall Street, though gains for several big technology companies helped push the Nasdaq above 10,000 for the first time. It gained 0.7% to 10,020.35.

The S&P 500 fell 0.5% to 3,190.14 and the Dow Jones Industrial Average fell 1% to 26,989.99. Small company stocks bore the brunt of the selling, with the Russell 2000 index losing 2.6% to 1,467.39.

A slight rise in the value of the Japanese yen, which erodes the value of overseas earnings when they are brought home, hit exporters’ shares.

Toyota Motor Corp.’s shares fell more than 2% while Fast Retailing’s dropped more than 3% in afternoon trading.

The Fed has cut its benchmark short-term rate to near zero, making the dollar less attractive for investors, as part of a historic effort to counter the economic ravages of the coronavirus pandemic.

The dollar was trading at 106.97 Japanese yen, down from 107.12 yen late Wednesday. The euro fell to $1.1348 from $1.1377.

Bond yields were broadly lower, reflecting renewed caution among investors.

The yield on the 10-year Treasury yield slid to 0.70% from 0.82% late Wednesday. It tends to move with investors’ expectations of the economy and inflation, though it’s still well above the 0.64% level where it started last week.

The Federal Reserve emphasized Wednesday that the central bank will keep providing support to the economy by buying bonds to maintain low borrowing rates.

It forecast no rate hike through 2022, which could make it easier for consumers and businesses to borrow and spend enough to sustain an economy depressed by business shutdowns and high unemployment.

Wall Street has been generally rising since late March, at first on relief following emergency rescues by the Fed and Congress. More recently, investors have begun piling into companies that would benefit most from a reopening economy that’s growing again. The S&P 500, a benchmark for many index funds, is now within 6% of reclaiming the all-time high it reached in February.

In other trading, benchmark U.S. crude oil dropped $1.46 to $38.14 a barrel. It rose 1.7% to settle at $39.60 a barrel on Wednesday. Brent crude, the international standard, fell $1.31 to $40.42 a barrel.