Stocks mixed as virus offsets US stimulus deal

HONG KONG – Asian markets were mixed today, as news of a US stimulus agreement was offset by surging virus cases and the imposition of a strict lockdown in England, while the pound sank by fears over stuttering Brexit talks.

Oil prices also tumbled as the new containment measures hammered expectations for travel over the Christmas period, with the discovery of a mutated and more infectious strain of the coronavirus in Britain also leading several governments to ban flights from the country.

Meanwhile markets were relieved that US lawmakers finally announced reaching an agreement for a US$900 billion (RM3.64 trillion) stimulus package. 

Also at the weekend, US authorities gave the green light to another vaccine, made by Moderna, paving the way for it to be rolled out this week.

However, the news comes as countries battle a frightening surge in infections that is battering economies once again. Among the worst-hit is the United Kingdom, where the government at the weekend tore up a planned relaxing of containment measures for Christmas.

Prime Minister Boris Johnson made the announcement as the country is hit by a new strain of the virus that is more infectious, and put millions of Britons into a strict new lockdown.

“For many, the end of 2020 cannot come soon enough,” said Simon Ballard, at First Abu Dhabi Bank Pjsc. 

“The pathogen has wrought mayhem across financial markets and so we expect the New Year wish of many market participants to be that the arrival and initial distribution of coronavirus vaccines now signals light at the end of a very tiring and debilitating tunnel.”

The pound, which had last week been sitting at highs not seen since mid-2018, sank against the dollar while it was also under pressure from the euro. 

The European unit was also down against the greenback, while a virus flare-up has led to some restrictions in Sydney, hitting the Australian dollar.

Equities in Tokyo, Hong Kong, Sydney, Mumbai, Manila, Bangkok and Wellington were all in the red, though Shanghai, Seoul, Taipei and Singapore rose.

“Markets have adopted a light-at-the-end-of-the-tunnel approach since Pfizer and Moderna’s vaccines burst onto the stage,” said OANDA’s Jeffrey Halley. 

“However, the weekend’s events have delivered an unceremonious Monday morning wake-up call that negotiating the first quarter of 2021 could be a torturous affair.”

A senior UK government source said the talks were expected to continue today but remain mired with significant differences. 

Time is running out for a trade deal, with Britain due to leave the EU single market in less than two weeks, but both sides of the intense negotiations in Brussels now expect the talks to run on for three or four days.

Oil prices were also taking a hefty knock on concerns about the negative impact on demand caused by new restrictions, with both main contracts down more than 3%.

“Stock markets can count their lucky stars that vaccine optimism so far has been able to Teflon the broader market downside,” said Axi strategist Stephen Innes. “But the same can't be said for oil prices.” – AFP, December 21, 2020