Elevated valuation, Asian share on slim legs by oil skid bitters

Reuters. People wearing protective masks after an outbreak of coronavirus disease (COVID-19) are reflected on a screen showing stock prices outside a brokerage in Tokyo.

By Swati Pandey

SYDNEY (Reuters) – Asian stocks were defensive on Monday as investors seized a deeper coronavirus-induced downturn against the backdrop of the global economy with skyrocketing prices as oil prices fell sharply.

Shares of China started lower while shares of Hong Kong-listed Semiconductor Manufacturing International Corp (SMIC) will be added to the U.S. trade blacklist for fear of falling to their lowest level since June 16.

China’s blue-chip index fell 0.3%.

Softbank fell 0.2% under heavy sales, according to media reports. Listed U.S. Technology stocks have bought at least 4 4 billion worth of call options.

Australian Australian stocks lost 0.1 per cent to 0.1.0 per cent, while South Korea gained 0.7 per cent.

After the loss of the last two weeks it left MSCI’s broad index of Asia-Pacific stocks outside of Japan, which fell below the 2-1 / 2-year peak last week.

World stocks hit record highs last week as the central bank’s stimulus pushed asset valuations to key levels. Booming tech stocks have cooled, while investors are worried about a developed economic recovery.

Considering the estimates, the figures show that China’s imports fell by 2.1% in August compared to a year earlier, which confused the expectations of a 0.1% increase as indicated by sluggish domestic demand. Exports have increased by 5.5 per cent as expected.

S&P 500 e-mini futures are down 0.1% and Nasdaq futures are down 0.7%. US markets will be closed on Monday for the Labor Day holiday.

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Nasdaq futures were pulled down due to the exclusion of Tesla (Nasdaq 🙂 from the group of companies to be added to the S&P 500.

Analysts at Jefferies (NYSE) expect the equities market to move forward in the correction.

“Our risk indicators are starting to turn from their cheerful highs,” Jefferies said.

It says it is unthinkable that global equities will churn for a while as some orphaned sectors / countries are franchised while rich value sectors pause or take off.

“On the balance of probabilities, there is still more room in last week’s correction.”

Jefferies said he was shifting the weight on the MSCI All World Index to “strategically bearish” in the short term.

It noted that the US Treasury yield curve of 10 to 5 years as well as the curve of 30 to 5 years have been higher in the last three months in the US.

“We wonder how many moves in both will upset the equity market,” Jefferies said.

Over the weekend, investors are looking for US inflation data, with producer and consumer prices expected to remain largely stable.

“Given the sluggishness in the labor market and the broader economy over the years, it is difficult to see where inflation will come from,” Brown Brothers Harriman said in a note.

“The main thing, he said, is that US rates will stay lower for much longer.

Commodity oil prices fell more than 1 barrel per barrel after Saudi Arabia cut weekly utsa monthly prices in five months to supply goods to Asia, the lowest level since July.

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Failed optimism about the recovery of demand amid the coronavirus epidemic also weighed heavily. 1% fell to 39.36 dollars per barrel from 0.8% skied to ided 42.30.

Bank of Canada policy meetings on Wednesday and the European Central Bank the next day were also on the radar of investors, both of whom expected policy to remain stable.

The action was muted in the forex market.

In the currency, the dollar was flat at 106.28 against the yen on Tuesday, ahead of a heavy week of macroeconomic data with household spending, current account and gross domestic product figures.

The euro was at 1.1838 before Brexit’s new talks with the European Union on Monday while the British pound was 0.3% weaker.


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