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Asian shares fall because of virus worries, China's inventory rally paused

© Reuters. A SGX sign is pictured on the Singapore Stock Exchange

By Stanley White and John McCrank

TOKYO / NEW YORK (Reuters) – Asian stocks and US stock futures fell on Friday as record-breaking new coronavirus cases in several U.S. states raised concerns that new locks could cause an economic recovery to fail while investors continued looking forward to the winning season.

MSCI's broadest index for Asia Pacific equities outside of Japan fell 0.76%. Australian stocks fell 0.42%, while Japanese stocks fell 0.4%.

China stocks fell 0.72%, the first drop in more than a week as investors posted gains on a five-year high as stocks rose.

E-mini futures for the S&P 500 wiped out early gains and fell 0.01%.

Antipodian currencies fell and the yen rose as traders avoided risk and sought safe havens.

Over 60,500 new COVID-19 infections were reported in the United States on Thursday. This is the largest one-day number of cases in a country since the virus appeared in China at the end of last year.

This increased concerns that renewed locks could affect the economic recovery.

The number of Americans applying for unemployment benefits fell to an almost four-month low last week, as data showed.

Investors remained cautious, however, as the report also said 32.9 million people were collecting unemployment checks in the third week of June, bolstering expectations that the job market would take years to recover from the COVID-19 pandemic .

"The weakness in financials with a 2.5% decline in the bank subindex lies ahead of the reporting season for the second quarter of next week, in JP Morgan Citigroup (NYSE 🙂 and Wells Fargo (NYSE 🙂 Everyone will report next Tuesday following the news that Wells Fargo plans to cut thousands of jobs by the end of this year, "said Ray Attrill, head of FX strategy at National Australia Bank (OTC :).

On Thursday, the S&P 500 fell 1.39% and the S&P 500 fell 0.56%, but the tech-heavy Nasdaq rose 0.53% to its fifth record high in six days.

Mainland China stocks fell Friday for the first time since June 29. Shares had risen to their highest level since 2015 on Thursday, thanks to the enthusiasm of retail investors and political support, even as regulators went through margin funding and warned the state media about market risks.

The rise in mainland Chinese stocks has some similarities to the bubble there five years ago, but is not yet on the order of magnitude and prices could continue to rise for some time, said capital economist Oliver Jones.

"However, another boom-bust cycle in China's stocks could have an even greater impact on markets in other countries than before, as foreign holdings are now much higher than five years ago," he said.

Due to the illegal margin lending, the Shanghai reference index in the 2015-16 market bubble fell more than 40% from its high within a few weeks.

On the foreign exchange market, the yen rose against the dollar and the euro when investors bought the traditional safe haven.

The Australian and New Zealand dollars, which are often traded as liquid indicators of risk due to their close ties to the Chinese economy, both fell against the greenback.

They also fell when local officials used bans and border restrictions to curb a sudden increase in coronavirus cases.

fell 0.23% to $ 39.53 a barrel, while falling 0.02% to $ 42.34 a barrel due to concerns about a long-term decline in global energy demand.

Chart: Asian stock markets https://product.datastream.com/dscharting/gateway.aspx?guid=516bc8cb-b44e-4346-bce3-06590d8e396b&action=REFRESH

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