Financial markets around the world are awake Until the risks of another coronavirus outbreak.
Asian markets, affected by the rise of cases from Japan to India, yes they had outperformed their global counterparts since early March, just as they seemed to benefit from an acceleration of the global recovery. The currencies of nations bitten by the virus have been insufficient in those where vaccines are advancing. And now the anxiety is beginning to spread, with recovery operations under pressure and US stocks sliding for two days in a row.
“Markets that have become too comfortable with the reopening of trade and have eased social restrictions may be in jeopardy with any rise and variants of Covid,” said Paul Sandhu, head of multi-asset quant solutions Asia Pacific at BNP Paribas Asset Management. “Markets with high vaccination rates somewhat avoid this downside risk.”
Said the World Health Organization On Tuesday, cases are rising in all regions except Europe, with the biggest rise last week in Asia, while India is battling its biggest wave. Japan came close to declaring an emergency for the virus as infections spread to its two most important and economically important urban areas, Tokyo and Osaka, while Toronto health authorities will order the closure of the city’s jobs. largest in Canada if they have more than five confirmed cases.
The MSCI AC World index has fallen every day this week after closing the record high last Friday. Investors face the latest wave of the virus with ratings significantly higher than they were before the pandemic.
The resurgence of the virus “could prove global assets, except those in which vaccine deployment is very advanced,” said Joshua Crabb, Robeco’s senior money manager in Hong Kong. “Clearly, new strains are more virulent and may require booster shots for those who are already vaccinated.”
Investors too eager to bet on the impact of the pandemic will fade: macro view
As for the currency, investors have been looking for paradises like the Japanese yen and Swiss franc this week and have rewarded those with a better history of outbreak management like the Israeli shekel and the Taiwan dollar. The Indian rupee has been the worst performing currency in Asia as the new wave of infections threaten a birth of economic recovery.
Shares were set for their biggest drop in about a month in Asia on Wednesday and U.S. futures retreated as investors reflected on the potential economic impact of the latest wave of viruses. Japanese stocks were among the worst.
“The resurgence of the virus in India and Japan appeared to be the main driver of the sale to Asia-Pacific stocks today,” said Margaret Yang, DailyFX strategist. “The reflation trade seems to have paused and gave way to shelters and defensive names.”
– With the assistance of Garfield Clinton Reynolds and Ishika Mookerjee