The US saw its largest gross domestic product contraction since World War 2 today. This ramped up fears over an economic recovery from the coronavirus pandemic being further away than first thought. Julian Evans-Pritchard, senior China economist at Capital Economics, told the FT: “The current rapid pace of recovery is likely to slow in the coming months as the initial boost from reopening businesses fades.”
Japan’s benchmark Topix index fell 1.4 percent in early trading in Asia-Pacific while Australia’s S&P/ASX 200 dropped 1.5 percent.
The S&P 500 closed 0.4 percent lower, despite companies including Amazon, Apple and Facebook recording huge quarterly results.
The US benchmark is expected to rise 0.6 percent when trading starts later today.
The FTSE 100 is set to gain 0.9 percent.
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5.56am update: Asian stocks stumble as global growth fears temper tech boost
Asian shares struggled this morning as economic data from the United States and rising global COVID-19 cases played a huge factor, despite strong US tech earnings and signs of manufacturing recovery in China and Japan.
The US dollar was also set for its worst month in a decade amid expectations the Fed will maintain its ultra-loose monetary policy for years.
US GDP collapsed at a 32.9 percent annualized rate in the second quarter, the deepest decline on record, while jobless claims rose last week, adding to signs the momentum of economic recovery has slowed.
“We are seeing some tentative signs of an improvement in global trade flows as economies reopen, but the overhang from recessionary conditions in the developed world and rising infection rates are kind of a focus for investors at the moment,” said Ryan Felsman, senior economist at CommSec in Sydney.