Shares down, dollar up as U.S. stimulus talks derail

A man wearing a face mask walks past a bank's electronic board showing the Hong Kong share index at Hong Kong Stock Exchange

Asian shares fell on Thursday, and the dollar edged higher as investors fretted over the slow pace of U.S. stimulus talks and a surge in global cases of COVID-19.

MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.31%, while the Nikkei was 0.66% lower.

Australian shares gave up 0.29%, Seoul’s Kospi was off 0.87%, and Chinese blue-chips lost 0.53%.

Uncertainty over the bill’s passage to stimulate a pandemic-ravaged economy comes as the United States faces a new wave of COVID-19 cases.

Nearly two-thirds of U.S. states were in a danger zone of coronavirus spread and six, including election battleground Wisconsin, reported a record one-day increase in COVID-19 deaths on Wednesday.

Against that backdrop, Wall Street’s three major averages closed lower on Wednesday after a choppy trading session.

The Dow Jones Industrial Average inched lower by 0.35%, while the S&P 500 lost 0.22%. The tech-heavy Nasdaq Composite dropped 0.28%.

On Thursday, the dollar was 0.1% higher against the yen at 104.66, while the euro notched down 0.12% to $1.1847.

But against a basket of major peers, the dollar appeared relatively unaffected by setbacks to stimulus talks, trading only slightly higher at 92.736, steadying after touching a seven-week low.

“Markets are now pricing in a strong likelihood of a Biden Presidency perhaps even a clean sweep of Congress, and this is weighing on the USD, as they view a less hostile trade environment. They will also probably be factoring in a large fiscal stimulus early next year, with none of the holds up that is currently preventing a deal,” Rob Carnell, chief economist at ING in Singapore, said in a note.

The yield on benchmark U.S. 10-year Treasury notes ticked down to 0.8092% from a U.S. close of 0.816% on Wednesday.

In commodity markets, oil prices extended sharp losses overnight, after higher U.S. gasoline inventories pointed to deteriorating fuel demand as coronavirus cases soar.

U.S. West Texas Intermediate (WTI) crude futures fell 0.37% to $39.88 a barrel, and Brent crude futures were 0.31% lower at $41.60.

Gold eased as the dollar edged up, with spot gold down 0.52% at 1,914.56 per ounce.

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