Asian Stocks Down, Worries Over Banking Scandal and New COVID-19 Persist

By Gina Lee

Investing.com – Asian stocks were down on Tuesday morning, reacting to a slump in U.S. stocks overnight over the rising number of COVID-19 cases and the status of the latest U.S. stimulus measures.

A fresh COVID-19 outbreak in Europe is increasing fears of more new lockdowns on the continent, with the U.K. due to announce new restrictions on bars and restaurants later in the day. Denmark and Greece implemented new restrictive measures during the previous week.

South Korea’s KOSPI slid 1.76% by 11:17 PM ET (3:17 AM GMT) and in Australia, the S&P/ASX 200 fell 0.66%.

Hong Kong’s Hang Seng Index was down 0.54%.

China’s Shanghai Composite edged down 0.17% and the Shenzhen Component edged down 0.18%. Fresh doubts were cast on Monday over Oracle’s takeover of TikTok's U.S. operations after U.S. President Donald Trump said that he would not approve the deal if parent company ByteDance remained in control at the entity TikTok Global. China responded shortly after that it also was unlikely to give the deal the green light, with Global Times editor-in-chief Hu Xijin tweeting that Beijing would likely reject the deal “because the agreement would endanger China’s national security, interests and dignity."

The deal, as it stands currently, would give ByteDance as much as an 80% share in TikTok Global, while giving U.S. investors slightly over 50% of shares.

Japanese markets were closed for a holiday.

Global stocks also tumbled on Monday after five global banks, including HSBC (HK:0005) and Standard Chartered (HK:2888), were named in a leak of more than 2,100 suspicious activity reports (SARs). The banks are accused of moving over $2 trillion of reportedly illicit funds, despite concerns over their origins, between 1995 and 2017.

Meanwhile, a potential partisan battle to replace Supreme Court Justice Ruth Bader Ginsburg could further hamper efforts to pass the latest round of stimulus measures. Speaker of the House Nancy Pelosi and House Democrats have released a stopgap government funding bill in the meantime, but without the support of the White House or Senate Republicans.

U.S. Federal Reserve Chairman Jerome Powell also said on Monday that the U.S. economy is improving but warned that there is a long way to go before a full recovery from COVID-19. Powell will testify before the House Select Subcommittee on COVID-19 on Wednesday to discuss the Fed’s response to the virus.

Some investors remained glum about the outlook.

“Valuations were getting more and more stretched and folks were looking the other way in the context of undeniable Fed support and the view that the U.S. government was going to top off the loss of income during the pandemic,” Macro Risk Advisors Founder and Chief Executive Officer Dean Curnutt told Bloomberg.

“There is concern that this uncertainty around the election is going to stay with us for a period after the election,” he added.

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