Asia report: Most markets weaker as airline stocks descend

Most markets in Asia finished weaker on Tuesday, as investors reacted to the likelihood of fresh restrictions in a number of European countries amid steadily rising Covid-19 infections.

In Japan, markets remained closed for a public holiday, as the yen strengthened 0.06% against the dollar to last trade at JPY 104.59.

On the mainland, the Shanghai Composite was down 1.29% at 3,274.30, and the smaller, technology-centric Shenzhen Composite lost 1.09% to 2,184.15.

South Korea’s Kospi lost 2.38% to 2,332.59, while the Hang Seng Index in Hong Kong lost 0.98% to 23,716.85.

The blue-chip technology stocks were both in the red in Seoul, with Samsung Electronics down 1.69% and SK Hynix losing 3.79%.

Airlines were weaker on the Korean peninsula as well, with Korean Air Lines down 2.39% and Asiana Airlines off 0.13%.

Among the airline plays in Hong Kong, Cathay Pacific was down 2.11%, China Eastern Airlines lost 4.8%, and China Southern Airlines was off 5.27%.

The moves southwards for travel-related stocks in Asia came as analysts warned that a number of European countries were likely to implement new social restrictions amid a growing number of coronavirus cases across the continent.

In the UK, a number of fresh restrictions will be implemented on Thursday, as the country grapples with a growing second wave of Covid-19.

“Tougher restrictions on mobility in Spain, Norway and the UK added to the risk-off sentiment and depressed European-sensitive assets,” said SquaredFinancial chief market analyst Rony Nehme.

“And the ongoing global demand concerns, coupled with fears of Libyan oversupply in spot oil markets, dampened inflation break-evens and lead to a risk-punitive retracement in global real rates.”

Oil prices were higher as the region went to bed, with Brent crude last up 1.47% at $42.05 per barrel, and West Texas Intermediate rising 1.54% to $40.15.

In Australia, the S&P/ASX 200 lost 0.66% to 5,784.10, as the country’s flag carrier Qantas Airways was 1.82% lower.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 went the other way to its regional peers, rising 0.61% to 11,609.22.

The down under dollars were weaker on the greenback, with the Aussie last off 0.14% at AUD 1.3863, and the Kiwi retreating 0.01% to NZD 1.4998.