Asian shares fall on fears virus outbreaks are rebounding

Shares were mostly lower in Asia on Monday on concern over a resurgence of coronavirus cases and pessimism after Wall Street posted its worst week in nearly three months.

Benchmarks in Tokyo, Sydney and Shanghai fell after China reported an outbreak of new infections in Beijing and reimposed precautions to prevent it from spreading.

Stocks are turning wobbly as investors re-evaluate their expectations for economic growth, which many skeptics have been saying were overly optimistic.

Case numbers are still growing in various nations, including emerging economies, and without a vaccine, relaxing lockdowns and reopening travel could bring on further waves of COVID-19 cases.

Japan's benchmark Nikkei 225 dropped 3.5% to finish at 21,530.95. South Korea's Kospi slipped 4.8% to 2,030.82. Australia's S&P/ASX 200 shed 2.2% to 5,719.80. Hong Kong's Hang Seng slid 2.2% to 23,775.37, while the Shanghai Composite edged down 0.9% to 2,892.94.

The future for the S&P 500 lost 2.8% and that for the Dow industrials slipped 3.2%, auguring a weak start for the week on Wall Street.

“Once again, the pandemic has triggered cause for fear and doubt about the road ahead,” Hayaki Narita at Mizuho Bank said in a commentary.

Rising COVID-19 cases in Latin American and parts of Asia, re-emerging “second wave” risks in parts of the U.S., South Korea and China and so-called “cluster” cases in Japan were adding to worries, he said.

The illness has continued to spread in countries that make up about 60% of the global GDP, noted Robert Carnell, regional head of research Asia-Pacific at ING.

“If globally, we are still in wave 1, then it is possible that without a vaccine, the big-wave is still lying out there somewhere waiting to hit,” he said.

Still, economists have noted signs that the global downturn brought on by the coronavirus pandemic might be bottoming out.

China’s industrial production accelerated in May, suggesting the world’s second-largest economy is gradually recovering from its shutdowns to fight the coronavirus.

Factory output rose 4.4% over a year earlier, up 0.5 percentage points from April’s rate, the National Bureau of Statistics reported Monday.

On Wall Street Friday, the S&P 500 rose 1.3% a day after dropping nearly 6% in its biggest rout since mid-March. It lost 4.8% for the week, snapping a three-week winning streak for the benchmark index. Small-company stocks and bond yields rose, meaning investors were a bit more willing to take on risk again a day after the sell-off.

That interrupted what had been a dramatic rally for the market as stocks sold off for three straight days as a rise in COVID-19 cases in the U.S. and a discouraging economic outlook from the Federal Reserve dashed investors' optimism that the economy will recover relatively quickly as states lift stay-at-home orders and businesses reopen.

The Dow Jones Industrial Average rose 1.9%, to 25,605.54 and ended the week with a 5.6% loss after slumping nearly 7% on Thursday.

The Nasdaq, which climbed above 10,000 points for the first time on Wednesday, gained 1% to 9,588.81. The Russell 2000 index of smaller companies gained 2.3%, to 1,387.68.

Despite the uncertainty, stocks have mounted a historic comeback in the past couple of months, with the S&P 500 rallying 44.5% between late March and Monday, erasing most of its losses tied to the pandemic.

Benchmark U.S. crude oil lost $1.72 to $34.54 a barrel in electronic trading on the New York Mercantile Exchange. It fell 8 cents to settle at $36.26 a barrel Friday. Brent crude oil, the international standard, fell $1.29 to $37.44 a barrel.

The dollar inched down to 107.27 Japanese yen from 107.37 yen. The euro fell to $1.1237 from $1.1303.