Investing.com – Asia Pacific stocks were down on Tuesday morning over rising tensions between the U.S. and China. The region followed the tumble in U.S. stocks as talks over the latest U.S. stimulus measures faltered and the Nov. 3 presidential election draws closer.
China’s Shanghai Composite was down 0.37% by 11:47 PM ET (3:47 AM GMT) and the Shenzhen Component inched down 0.04%. Tensions between the U.S. and China flared up after China imposed sanctions on U.S. companies, including Lockheed Martin (NYSE:LMT), Boeing Defense and Raytheon (NYSE:RTX) “in order to uphold national interests,” Chinese Foreign Ministry spokesman Zhao Lijian said on Monday. China’s move comes as the U.S. contemplates a potential $2.4 billion sale of U.S. anti-ship missiles to Taiwan, potentially encompassing as many as 100 Harpoon Coastal Defense Systems built by Boeing (NYSE:BA). The systems in turn include up to 400 land-based missiles.
On the economic front, Chinese authorities will set the nation’s next five-year plan through Oct. 29.
Hong Kong’s Hang Seng Indexfell 1.30%.
Japan’s Nikkei 225 was down 0.33%. The Bank of Japan will announce its monetary policy on Thursday, with Governor Haruhiko Kuroda also due to deliver a briefing.
House of Representatives Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin were unable to reach a consensus on the measures with White House economic advisor Larry Kudlow saying that whilst differences between the two sides “have narrowed … [but] the more it narrows, the more conditions come up on the other side,” White House economic adviser Larry Kudlow said.
“The challenge for markets is that in most cases they are already pricing a very strong economic bounce. The new [COVID-19] outbreaks, and the potential for a double-dip recession, directly contradict this [Kudlow’s] assumption,” CMC Markets chief market strategist Michael McCarthy told Reuters.
The number of COVID-19 cases continues its incessant rise, with over 43.4 million cases globally as of Oct. 27, according to Johns Hopkins University data.
“The COVID-19 case news flow has clearly resonated … the reflation trade which was working so beautifully is being part unwound, not because of election repricing, but due to the new wave of COVID-19 cases,” Pepperstone head of research Chris Weston said in a note.
President Donald Trump saw a boost to his campaign as the Senate confirmed his third Supreme Court nominee, Amy Coney Barrett, on Monday. However, polls show that Trump is trailing behind Democrat candidate Joe Biden a week left before Americans head to the polls. The U.S. will release data, including GDP for the third quarter on Thursday, expected to be the strongest on record after seeing a record plunge in the previous quarter.