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Covid’s Threat to Recovery Spreads Gloom Across Asia’s Markets

Japan’s decision to ban fans from most Olympic events as the virus returns with a vengeance across much of the region brought an air pessimism to trading floors

Traders looks at prices of China stocks from market indicator boards.
Markets slumped in China on Friday after the ruling party's Politburo Standing Committee called for people to resolutely persist with the controversial zero-Covid strategy. Photo: Reuters.

Japan’s decision to ban fans from most Olympic events as the virus returns with a vengeance across much of the region brought an air of pessimism to trading floors


Covid’s latest deadly surge across the globe dragged Asia’s markets down on Friday with traders fearful over the virus’s impact on the recovery. 

Japan’s decision to ban fans from most Olympic events, amid a virus state of emergency in the country, reinforced fears over the spread of further infections from new coronavirus strains.

“Covid-19 resurgences remain a key risk for the region,” IG Asia market strategist Jun Rong Yeap wrote in a note. “This may suggest a slower recovery ahead with third-quarter GDP growth probably revised lower.”


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Tokyo pared most of its losses to close down 0.6% after falling as much as 2.5%. The benchmark Nikkei 225 index lost 0.63 percent, or 177.61 points, to 27,940.42, closing down for a third straight session. The broader Topix index fell 0.41 percent, or 7.94 points, to 1,912.38.

Sydney fell 0.9% while Seoul and Taipei were down more than 1%. Shanghai recovered its earlier losses to close virtually unchanged.

Hong Kong was a rare bright spot, closing 0.7% higher on bargain hunting following the previous day’s rout which saw the benchmark index fall 2.9% on concerns over Beijing’s crackdown on tech titans.

The Hang Seng Index climbed 191.41 points, to 27,344.54. The benchmark Shanghai Composite Index edged down 1.42 points to close at 3,524.09, while the Shenzhen Composite Index on China’s second exchange rose 0.1%, or 1.64 points, to 2,436.84.



All three major US indices ended solidly down Thursday, with the Dow shedding 0.8%.

“The markets have been supported by expectations on economic growth before … but now investors question whether the economy will normalise given a new wave of Covid-19 because of new variants and stagnation of economic indications,” Okasan Online Securities said.

On the bond market, the yield on 10-year US Treasuries advanced to 1.33%, off Thursday’s four-month low of 1.25%, while the yield on 30-year Treasury bonds was at 1.96%.



“The slide in US 10-year yields this week appears to suggest that bond investors are becoming increasingly concerned about a sharp slowdown in global and US growth prospects, as well as diminishing inflation expectations,” said Michael Hewson, chief market analyst at CMC Markets UK.

Oil prices rose in Asian trade after US government data showed a fall in crude inventory and surging demand in the peak summer driving season.

The Brent contract was hovering around $74.55 a barrel while WTI was at $73.50.



Tokyo – Nikkei 225: DOWN 0.6% at 27,940.42 (close)

Hong Kong – Hang Seng Index: UP 0.7% at 27,344.54 (close)

Shanghai – Composite: FLAT at 3,524.09 (close)

New York – DOW: DOWN 0.8% at 34,421.93 (close)


  • Reporting by AFP


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Sean O'Meara

Sean O'Meara is an Editor at Asia Financial. He has been a newspaper man for more than 30 years, working at local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.


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