A sell-off in shares of HSBC and Standard Chartered deepened as concerns that new waves of coronavirus could stall a global economic recovery hit stocks across Asia-Pacific.
Shares in both banks fell a further 2.3 per cent on Tuesday in Hong Kong, taking losses for each of the Asia-focused lenders to more than 7 per cent over two days. The pair were among those named in media reports on Monday that alleged international banks had flagged $2tn in suspicious transfers to US anti-money laundering authorities.
HSBC’s stock has more than halved this year as the Covid-19 crisis and tensions between the US and China have hit its business.
Over the weekend, Chinese state-run tabloid the Global Times said the London-headquartered bank was a candidate for inclusion in Beijing’s first “unreliable entities” list. The as-yet unreleased list is set to target companies deemed to have harmed Beijing’s interests.
Elsewhere in the region, China’s CSI 300 of Shanghai- and Shenzhen-listed shares and Hong Kong’s benchmark Hang Seng fell 0.4 per cent and 0.3 per cent, respectively, on Tuesday. Australia’s S&P/ASX 200 dropped 0.7 per cent. Markets in Japan were closed for a public holiday.
The losses in Asia followed a rough session on Wall Street in which the S&P 500 shed 1.2 per cent on worries over the outlook for a global economic recovery. That came on the heels of a 3.4 per cent loss for London’s FTSE 100.
Futures tipped the S&P 500 to slip 0.1 per cent when US markets begin trading later on Tuesday.
Markets were “far from confident” in the US Federal Reserve’s ability to generate 2 per cent inflation, said Robert Rennie, head of global market strategy at Westpac. He added that “multiple political flashpoints” in the US, including a fight over a new Supreme Court nomination, had lowered the odds of more fiscal stimulus ahead of November’s presidential election.
Jay Powell, the Fed chair, will tell Congress on Tuesday that businesses hit by the coronavirus pandemic may need “direct fiscal support” as lawmakers in Washington struggle to agree on a stimulus package.
Mr Rennie said investors were also becoming nervous about a week-long holiday in China that begins on October 1 and its impact on global commodities demand. Markets are showing “signs of softening within a number of key commodities”, he added.
Oil prices steadied in Asian trading on Tuesday, following a sell-off a day earlier prompted by concerns over the outlook for global demand. Brent crude, the international benchmark, gained 0.4 per cent to $41.59 a barrel.