SYDNEY (Reuters) – Asian shares began warily on Monday as investors eyed efforts to stitch together more fiscal stimulus in the eurozone and United States to help economies ride out the effects of a record jump in COVID-19 cases globally.
MSCI’s broadest index of Asia-Pacific shares outside Japan was flat at 541.49, with Australian shares down 0.3% and South Korea’s KOSPI just a shade higher.
Japan’s Nikkei was up 0.1%.
E-minis for the S&P 500 rose 0.1% in early Asian trading.
Last week, European, U.S. and other equity markets notched their third weekly gain in a row, although the pace of the rally has slowed.
The Dow fell 0.23% on Friday, the S&P 500 gained 0.29% and the Nasdaq Composite added 0.28%.
Investor focus is squarely on a European Union Summit where leaders are haggling over a plan to revive economies throttled by the COVID-19 pandemic.
The leaders are at odds over how to carve up a vast recovery fund designed to help haul Europe out of its deepest recession since World War Two, and what strings to attach for countries it would benefit. Diplomats said it was possible that they would abandon the summit and try again for an agreement next month.
In response, the euro opened 0.2% lower in early Asian trade to go as low as $1.1400. It was last up 0.2% at $1.1442.
“The commitment by EU leaders in extending talks and reports of further talks if no agreement is reached today shows the desire to have the recovery fund in some form,” said NAB analyst Tapas Strickland.
However, it was a likely to be “a very long and winding road,” before a deal is reached, he added.
In the United States, the Congress is set to begin debating a new aid package this week, as several states in the country’s South and West implement fresh lockdown measures to curb the virus.
The virus has claimed over 140,000 U.S. lives in total since the pandemic started, and Florida, California, Texas and other southern and western states shatter records every day.
The United States, with 3.7 million total cases, has almost as many infections as the next three hardest-hit countries combined – Brazil, India and Russia.
“Wall Street remains upbeat, but sentiment on Main Street is turning grim in response to the upsurge in COVID-19 cases that is prompting a renewal of lockdown restrictions,” Oxford Economics said in a note.
“Furloughed workers are more pessimistic about getting their jobs back; they are also becoming more concerned about the loss of income if a fiscal package with new relief is not forthcoming.”
Fiscal support is also a focus in Australia where the government will release a ‘mini budget’ later this week.
In currencies, the dollar was a shade higher on the Japanese yen at 107.06. Sterling was mostly flat at $1.2571.
The Australian dollar ticked up 0.1% at $0.7002. That left the dollar index barely changed at 95.905.
In commodities, spot gold was flat at 1,808.5 an ounce.
U.S. crude rose 6 cents to $40.65 per barrel and Brent was up 2 cents at $43.15.
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