Investors are looking for signs of economic recovery.
Photo: Eugene Hoshiko/Associated PressInternational stocks wavered, as investors remained cautious about the potential for a resurgence in coronavirus cases and the speed of economic recoveries.
As of Wednesday afternoon Hong Kong time, key benchmarks in Hong Kong, Shanghai, Seoul, Sydney and Tokyo were little changed, ranging from a 0.6% loss for Australia’s S&P/ASX 200 to a 0.3% gain for South Korea’s Kospi Composite. E-mini S&P 500 futures eked out a 0.2% gain.
David Beale, who oversees Deutsche Bank’s institutional investor relationships in the region, said investors he’s spoken to are still conservative in their investing strategy. He said they were waiting for clear signs of economic recovery before becoming more active in allocating funds into assets.
“Until we see a clear path to the exit strategies, investors remain very cautious,” he said. “They want to see how the reopenings play out and what the impact on the economy will be.”
Mr. Beale said that had prompted some to bet that emerging-markets currencies would weaken. “For now, we see a bias to short emerging-market foreign currencies given the slow backdrop of global growth, and the impact around employment across markets globally.”
On Tuesday, the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite all dropped about 2%, although traders said there didn’t appear to be a single, clear catalyst for the selling.
Major stock markets have gained in recent weeks, but investors have still opted to bulk up on protection such as equity puts, said Paul Sandhu, head of multiasset quant solutions for Asia-Pacific at BNP Paribas Asset management.
Put options are contracts that give investors the right to sell stocks at a specific price, later in time. Investors can use puts as a way to protect themselves against a potential selloff.
“There is still a lot of uncertainty around testing and reopenings in the U.S. It’s why we’re still seeing volatility in the markets,” he said.
Top Trump administration health officials emphasized the need for caution and widespread testing while easing coronavirus lockdowns, warning in a Senate hearing that serious risks would continue into the fall as schools looked to reopen.
House Democrats released a roughly $3 trillion bill to battle the health and economic effects of the pandemic, staking out a position ahead of talks with Senate Republicans who are wary of additional spending.
The yield on the U.S. 10-year Treasury note dropped 0.01 percentage point to 0.669%.
Write to Frances Yoon at frances.yoon@wsj.com
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May 13, 2020 at 01:07PM
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