Asia markets slip as virus outbreaks mute hopes for rebound

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A woman wearing a face mask walks past a bank's electronic board showing the Hong Kong share index at Hong Kong Stock Exchange Tuesday, July 7, 2020. Asian shares were mixed Tuesday, as some benchmarks were buoyed by an ongoing worldwide rally as investors bet on a dramatic economic turnaround amid ongoing challenges of the coronavirus outbreak. (AP Photo/Vincent Yu)

BEIJING – Markets were mostly lower in Asia on Tuesday as expanding coronavirus outbreaks dimmed hopes for a global recovery, despite an overnight rally in tech shares that pushed the Nasdaq composite to another record high.

Japan's benchmark Nikkei 225 dropped 0.6% to 22,577.65 and South Korea's Kospi lost early gains to fall 0.4% to 2,180.30. Australia's S&P/ASX 200 edged 0.1% lower to 6,008.10. Hong Kong's Hang Seng shed 0.5% to 26,376.18, while the Shanghai Composite gained 0.8% to 3,359.13.

Government stimulus and hopes for an economic turnaround have kept investor sentiment upbeat, Prakash Sakpal and Nicholas Mapa, senior economists at ING, said in a report. But pandemic uncertainties are looming, and the situation is fragile.

“Investors continue to look past the sustained pickup in new infections in the southern part of the U.S. as well as other parts of the world like Israel, but a sustained influx of downbeat reports could change sentiment,” their report said.

The fallout from the pandemic has sent financial earnings plunging at many Asian companies, including giant Japanese exporters like Toyota Motor Corp. Their recovery is not expected until overseas consumption picks up.

Daily confirmed infection cases have not fallen in Tokyo, exceeding 100 in recent days. The Japanese government is still pushing for events and businesses to open gradually with social distancing restrictions in place to keep growth going.

Profit-taking set in quickly on Tuesday, erasing much of an initial rise for regional benchmarks that tracked Wall Street's rally.

Overnight, the S&P 500 rose 1.6%, following up on similar gains in Europe and Asia, clawing back to within 6.1% of its record set in February.