Asian Markets Mixed As Traders Weigh Second Wave, Stimulus

Markets were mixed Thursday as investors took a breather after a broad two-day rally, while they weighed concerns about a new wave of virus infections against massive monetary easing and stimulus measures.

The financial support, along with the easing of lockdown restrictions, opening-up of economies and positive data have provided support to equities across the planet in recent months.

But there is growing sense that traders may have got ahead of themselves and observers warn markets could be in line for a pull-back unless there is a major event to move higher, such as the development of a vaccine.

After starting the day on the back foot, regional equities clawed back losses and some managed to shift into positive territory.

Tokyo ended down 0.5 percent and Hong Kong dipped 0.1 percent, while Sydney slipped 0.9 percent after data showed a massive jump in Australian job losses.

Wellington was also down one percent after news the New Zealand economy suffered its worst contraction for almost three decades in the first quarter.

Seoul slipped 0.4 percent, while Bangkok and Jakarta were also down.

But Shanghai ended up 0.1 percent, Singapore added 0.3 percent, Mumbai climbed 0.7 percent, Taipei put on 0.1 percent and Manila rallied more than one percent.

London, Paris and Frankfurt all fell after opening.

"There is no doubt that economic activity is recovering from its worst levels," said Stephen Innes at AxiCorp. "We can see that in numerous official and anecdotal reports. Still, financial data is thought to be unreliable these days and the positive knock-on effects seem to be losing swagger quickly as we all know the economic nasties are coming down the road."

Analysts suggested there may also be some trepidation on trading floors about possible Democratic victories in November's US presidential and congressional elections, with Donald Trump's rival Joe Biden considered less likely to push such things as deregulation and tax cuts.

Trump's chances were dealt another blow by the release of excerpts from a book by former national security advisor John Bolton, which says the president pleaded with China's leader Xi Jinping for help to win re-election in 2020.

"Bolton's words do blunt Trump's China strategy which he was likely to campaign hard on in the election," said National Australia Bank's Tapas Strickland.

"Either way, markets have started to assign probabilities of a Democratic clean sweep and what policies would likely emanate if they control three arms of government."

There is also a lot of fear among investors that while countries are slowly reopening their economies -- with flights resuming, bars, cafes and restaurants serving people and professional football coming back -- new infections continue to surge in some places and are flaring up again in others.

Eyes are on Beijing, which has imposed new lockdowns, reclosed schools and banned flights again after the emergence of new clusters linked to markets, while there have also been massive spikes in Texas and Florida.

Meanwhile, tensions between the two Koreas were back in the spotlight, while dealers were also tracking India-China relations following a deadly skirmish on their Himalayan border this week.

Traders are awaiting the end of meeting at the Bank of England, which is tipped to unveil further measures to support the struggling British economy.

Tokyo - Nikkei 225: DOWN 0.5 percent at 22,355.46 (close)

Hong Kong - Hang Seng: DOWN 0.1 percent at 24,464.94 (close)

Shanghai - Composite: UP 0.1 percent at 2,939.32 (close)

London - FTSE 100: DOWN 0.6 percent at 6,213.59

West Texas Intermediate: DOWN 0.4 percent at $37.82 per barrel

Brent North Sea crude: UP 0.1 percent at $40.75 per barrel

Euro/dollar: UP at $1.1245 from $1.1242 at 2050 GMT

Dollar/yen: DOWN at 106.91 yen from 106.97

Pound/dollar: DOWN at $1.2519 from $1.2551

Euro/pound: UP at 89.81 from 89.54 pence

New York - Dow: DOWN 0.7 percent at 26,119.61 (close)