By Wayne Cole
SYDNEY (Reuters) – Asian stocks stepped back on Wednesday after two sessions of sharp gains as investors tempered their optimism about the coronavirus while death tolls were still mounting across the globe.
While the number of COVID-19 hospitalizations seemed to be levelling off in New York state, deaths across the United States jumped by a record 1,800.
Mainland China’s new coronavirus cases also doubled in 24 hours due to infected overseas travellers.
Not helping sentiment were wild swings in the oil market, where prices rebounded in Asia after sliding on Tuesday to leave traders feeling dizzy. [O/R]
U.S. crude () futures jumped 5.5% to $24.93 a barrel, having shed 9.4% the session before, while Brent crude () added 75 cents to $32.62.
The erratic action spilled over into equities with MSCI’s broadest index of Asia-Pacific shares outside Japan () losing 0.7%.
Japan’s Nikkei () went the other way and added 0.4%, while Shanghai blue chips () lost 0.6%.
E-Mini futures for the S&P 500 () wobbled either side of flat, while EUROSTOXX 50 futures () dropped 1.1%.
“There is reason to be cautious as this looked to be a relief rally ahead of next week’s start of Q1 earning season and before data reveals the depth of the virus impact,” said analysts at JPMorgan (NYSE:) in a note.
“Data shows the recent move higher has been accompanied by short covering and de-risking rather than active risk taking on the long side.”
The S&P 500 () had ended Tuesday down 0.16%, having been up as much as 3.5% at one stage. The Nasdaq () dropped 0.33% and the Dow () 0.12%.
After U.S. stock markets closed, President Donald Trump said the United States may be getting to the top of the coronavirus curve.
The Trump administration asked Congress for an additional $250 billion in emergency economic aid for small U.S. businesses reeling from the pandemic.
“While the virus’ ‘curve is flattening’, the economic effects of the corona crisis will linger for years in our view,” Commonwealth Bank of Australia economist Joseph Capurso said in a note.
“Economies will take time to re‑open, some businesses will not re‑open, and unemployment will take years to return to levels reported at the end of 2019.”
Ratings agency S&P Global on Wednesday warned the cost of combating the virus would weigh heavily on Australia’s finances and changed the outlook for the country’s rating to negative.
That knocked the dollar down 0.6% to $0.6130
Against a basket of currencies, the dollar edged up 0.2% to 100.170 ().
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