Stocks across Asia and oil prices dropped as investors cut back on riskier positions on fears that the weekend will bring more bad news on the coronavirus pandemic.
The falls came after Wall Street’s S&P 500 rallied overnight while hopes of a ceasefire in Saudi Arabia and Russia’s oil price war boosted crude by more than 20 per cent.
On Friday, Japan’s benchmark Topix index fell 0.4 per cent, Australia’s S&P/ASX 200 dropped 1.8 per cent and South Korea’s Kospi shed 0.6 per cent.
Oil prices pared some of their gains as Brent crude, the international benchmark, slipped 4.1 per cent to $28.73 a barrel. US marker West Texas Intermediate fell 5 per cent to $24.06.
Investors said on Friday that they did not expect the relief for markets brought on by hopes of an oil supply cut deal to last for long.
Futures trading pointed to losses on Wall Street later in the day, with the S&P 500 tipped to drop 1.2 per cent. The FTSE 100 was expected to fall 0.8 per cent when trading begins in London.
“The [Trump] administration is doing a good job of distracting the markets when we see bad economic data hitting the screens, and I think yesterday was a good example of that,” said Robert Rennie, global head of market strategy at Westpac.
On Thursday, data showed that unemployment claims in the US hit a record 6.6m last week, due to the economic disruption caused by coronavirus.
Mr Rennie was also sceptical that the kind of oil production cuts being talked about by Mr Trump — up to 15m barrels per day — were realistic. “It’s difficult to see the kind of numbers that Trump was suggesting in terms of crude production cuts being easily achievable,” he said.
Traders on Friday also had to contend with new signs of how the pandemic is hitting Asian economies.
China’s CSI 300 index was down 0.3 per cent after the Caixin Services purchasing managers’ index showed the country’s services sector contracted for the second month in a row in March due to the coronavirus outbreak.
Hong Kong’s Hang Seng index fell 0.6 per cent after a separate PMI reading showed private business activity in the city shrank at its second-fastest rate in more than 20 years.
Ronald Wan, chief executive at Partners Capital, said investors were wary about holding stock positions over the weekend out of fears of more negative developments regarding coronavirus. On Thursday the number of new infections globally from the outbreak passed 1m people, according to Johns Hopkins University data.
Aversion to risk boosted sovereign bond prices, pushing down yields. The yield on the 10-year US Treasury bond fell 4 basis points to 0.5854 per cent.