Asian Stocks Down, Subdued by Fresh  European COVID-19 Outbreak By

© Reuters.

By Gina Lee – Asian stocks were down on Monday morning, with an uptick in European COVID-19 cases in Europe dampening Investor sentiment.

The U.K. is considering a fresh national lockdown U.K., with Health Secretary Matt Hancock warning that the country is at a “tipping point.” Meanwhile, countries such as Denmark and Greece re-implemented restrictions during the previous week. The European Central Bank (EBC) launched a review of its COVID-19 bond-buying program, with the program’s timeline and whether its flexibility should be extended to older ECB programs reportedly up for discussion.

China’s was down 0.46% by 11:21 PM ET (4:21 AM GMT). Meanwhile, the edged down 0.08%. The People’s Bank of China kept the for corporate and household loans steady for the fifth straight month at its September rate fixing earlier in the day, as widely expected. The one-year loan prime rate (LPR) was unchanged at 3.85%, while the five-year LPR remained at 4.65%.

U.S.-China tensions are also on investors’ radars after U.S. Magistrate Judge Laurel Beeler halted curbs imposed on WeChat by President Donald Trump’s administration. Beeler’s ruling was issued in response to an earlier Department of Commerce ban on WeChat appearing in U.S. app stores from Sunday. Meanwhile, Trump approved Oracle (NYSE:) Corp’s acquisition of TikTok’s U.S. operations “in concept” a day earlier.

Hong Kong’s slid 1.09%, with HSBC’s Hong Kong shares (HK:) plunging to their lowest point since 1995. HSBC is one of the banks accused of moving large sums of allegedly illicit funds over nearly two decades by the Financial Crimes Enforcement Network (FinCen).

South Korea’s edged down 0.18%, reversing some earlier gains, and in Australia, the fell 0.74%.

Japanese markets were closed for a holiday.

U.S. Federal Reserve Chairman Jerome Powell is due to testify before the U.S. Congress later in the week to discuss U.S. COVID-relief efforts, with investors also looking out for progress on the latest COVID-19 stimulus package.

Some investors struck a pessimistic note.

“We do have concerns down the stretch about the markets reacting poorly to some of the uncertainties facing us -the election, potentially around Covid-19, and the fact that we don’t have a stimulus package yet,” Riverfront Investment Group senior market strategist Rebecca Felton told Bloomberg.

“I would have to think we could be volatile to the downside here.”

But other investors remained more optimistic, despite global equity valuations hovering close to an almost two-decade high. With fund flow data showing that money is continuing to move into U.S. stocks and the Fed pledging near-zero interest rates for years to come, they expect profits to moderately recover from the effects of COVID-19.

“We’ve been reasonably optimistic toward the equity market for quite some time,” Tribeca Investment Partners fund manager Jun Bei Liu told Bloomberg.

“The fundamental economic recovery seems to be on track. Over the next 6-12 months we do see substantial earnings improvement.”

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