Asia report: Markets mostly weaker amid fears of new Covid strain

Markets in Asia finished mostly lower on Tuesday, as investor sentiment sank on the emergence of a new, more contagious strain of Covid-19 in the UK.

In Japan, the Nikkei 225 was down 1.04% at 26,436.39, as the yen weakened 0.07% against the dollar to last trade at JPY 103.39.

Uniqlo owner Fast Retailing was up 0.58%, while among the benchmark’s other major components, robotics specialist Fanuc was down 0.96% and technology giant SoftBank Group fell 2.38%.

The broader Topix index was 1.56% weaker by the end of trading in Tokyo, closing at 1,761.12.

On the mainland, the Shanghai Composite was off 1.86% at 3,356.78, and the smaller, technology-centric Shenzhen Composite was 1.76% lower at 2,264.48.

South Korea’s Kospi lost 1.62% to 2,733.68, while the Hang Seng Index in Hong Kong slipped 0.71% to 26,119.25.

The blue-chip technology stocks were weaker in Seoul, with Samsung Electronics down 0.96% and SK Hynix losing 3.02%.

Sentiment sank overnight as investors digested the latest Covid-19 developments, as a new strain of the coronavirus saw infections soar in the UK and a number of countries implement travel and freight restrictions.

Almost all countries in Europe had banned travel from the UK in response to the new strain, with France also placing a temporary blockade on freight, seeing ports and the Eurotunnel close and lorry queues stretch for miles in Kent.

“The new health fears prompted several countries to halt flights from the UK as a way of trying to stop the spread of the new variant of the coronavirus,” said CMC Markets analyst David Madden.

“The French government took the harshest measures as they not only banned flights from Britain but also freight too.”

Madden noted that it was confirmed that the new strain had been identified in Austria, Denmark and the Netherlands, so there was a risk that other countries had already been infected.

“Yesterday the UK was given the cold shoulder, but it is possible that other nations will be in line for the isolation treatment in the near-term.

“The UK-French trade situation is looking to improve as the Paris administration is looking to lift its freight ban, and that should ease some concerns with respect to supply chains.”

Oil prices were lower at the end of the Asian day, with Brent crude last down 1% at $50.40 per barrel, and West Texas Intermediate losing 1.23%.

In Australia, the S&P/ASX 200 declined 1.05% to 6,599.60, as fresh data out of Canberra showed the country’s retail sales rising a seasonally-adjusted 7% month-on-month in November.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 was the region’s odd one out, rising 1.86% to close at 12,842.69.

The gains in Wellington were driven by the bourse’s big dividend yielders, with telecoms company Spark rising 2.37%.

Both of the down under dollars were weaker against the greenback, with the Aussie last off 0.62% at AUD 1.3262, and the Kiwi retreating 0.72% to NZD 1.4184.