Fed’s Powell opens door to potential rate cuts at Jackson Hole
* Asian stock markets : https://tmsnrt.rs/2zpUAr4
By Swati Pandey
SYDNEY, June 15 (Reuters) - Asian shares stumbled on Monday
and oil prices slipped as fears of a second wave of coronavirus
infections in Beijing sent investors scurrying for safe-havens
while underwhelming data from China further weighed on
sentiment.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS was down 0.3% with Australian shares off 0.1%
and South Korea .KS11 easing 0.3%. Japan's Nikkei .N225
faltered 0.7%.
Chinese shares opened in the red with the blue-chip CSI300
index .CSI300 down 0.1%.
Monday's losses follow a strong rally in global equities
since late March, fuelled by central bank and fiscal stimulus
and optimism as countries gradually lifted restrictions put in
place to curb the spread of the novel coronavirus.
"Any new outbreak will be looked at very, very cautiously by
investors. The market is putting into perspective that the
COVID-19 issue has not been resolved yet. It's a reality check,"
said James McGlew, analyst at stockbroker Argonaut.
McGlew expects a further correction "as markets quantify
what lies ahead of us."
The lead from Wall Street was also dour with e-minis for the
S&P500 Esc1 sinking 1.1% in early Asian trading.
Risk sentiment took a knock after Beijing recorded dozens of
new COVID-19 cases in recent days, all linked to a major
wholesale food market. Authorities have closed the centre and
locked down nearby housing districts. Investors are also fretting over a spike in cases in the
United States where more than 25,000 new cases were reported on
Saturday.
Worldwide coronavirus cases have crossed 7.86 million with
430,501 deaths, according to a Reuters tally. Economic data from China did little to revive risk
appetite.
China's industrial output rose 4.4% in May from a year ago
when analysts had forecast a gain of 5.0% while retail sales
fell a larger-than-expected 2.8% in a sign of weak domestic
demand.
The Chinese yuan extended losses in offshore trade after the
data to be last at 7.0883 per dollar.
Some analysts were still hopeful of a revival in sentiment.
"We assume that any second wave is likely to be more
manageable than the first given earlier policy experience,"
analysts at Morgan Stanley wrote in a note.
"Policy easing will also help Asia (excluding Japan) get
back on its feet better."
The risk-sensitive currencies of Australia AUD=D3 and New
Zealand NZD=D3 sold off with both down 0.4% at $0.6855 and
$0.6424, respectively.
Elsewhere, the safe haven Japanese yen rose on the greenback
to 107.18 yen JPY=EBS .
Analysts said further tests awaited global markets this week
– in particular whether re-opening hopes could still push
equities higher.
Federal Reserve Chairman Jerome Powell is also due to
testify before Congress where "he may try to spin a more
upbeat/hopeful outlook – but whether markets listen remains to
be seen," said Betashares chief economist David Bassanese.
Also of interest is U.S. May retail sales figures on
Tuesday, which are expected to bounce smartly after a slump in
April.
In commodities, oil extended losses after posting its first
weekly loss since late April. Brent crude LCOc1 was last down
2.25% at $37.86 a barrel while U.S. crude CLc1 fell 3.09% to
$35.14.
Oil investors await OPEC+ committee meetings of experts
later this week who will advise the producer group and its
allies on output cuts. O/R Gold rose 0.2% to $1,732.2 an ounce on safe haven demand.
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(Editing by Sam Holmes)