Asian markets retreat as Kabul falls, COVID infections rise

TOKYO — Asian shares slipped Monday, amid worries about surging coronavirus infections in the region, as well as concerns about the long-term impact from the Afghan government’s collapse.

Japan’s benchmark Nikkei 225 NIK, -1.62% sagged 1.9% in morning trading, while Australia’s S&P/ASX 200 XJO, -0.61% slipped 0.4%. Hong Kong’s Hang Seng HSI, -0.93% dipped 0.8%, while the Shanghai Composite SHCOMP, +0.03% added 0.3%. South Korean markets were closed for Liberation Day, a national holiday. Stocks declined in Taiwan Y9999, -0.73%, Singapore STI, -0.37% and Indonesia JAKIDX, -1.11%.

Analysts said the relatively slow vaccination rollouts in Asia are pushing down investor sentiments. Japan, Thailand and Malaysia are among nations reporting several record daily new cases recently and several nations have seen surges outpace or otherwise hinder their vaccination rollouts.

“This is stretching out already elongated timelines to herd immunity, necessitating periodic lockdowns to stymie rising infection rates,” said Venkateswara Lavanya at Mizuho Bank in Singapore.

“Asia remains the epicenter of the spread, with the number of COVID cases in Vietnam, the Philippines and Thailand rising over the weekend.”

Analysts said the Taliban sweeping into Afghanistan’s capital may feel like a faraway event, but will undoubtedly affect markets elsewhere, including Asia.

“Yes, markets will try to brush this geopolitical earthquake off: It’s just Afghanistan; It’s a long way away,” said Rabobank in its daily market commentary. “This geopolitical nightmare is almost certainly only just beginning.”

In Japan, the government reported the economy grew at an annual rate of 1.3% in April-June, raising hopes for a gradual recovery from the damage brought on by the pandemic. Some analysts had expected a contraction. Underlining growth were improved private consumption and residential investment, as well as rising exports and imports.

Wall Street finished out last week with small gains and new highs for the S&P 500 and Dow Jones Industrial Average.

The benchmark S&P 500 SPX, +0.16% rose 0.2% and notched its second-straight weekly increase. The Dow DJIA, +0.04% and the Nasdaq COMP, +0.04% edged up less than 0.1%.

In energy trading, benchmark U.S. crude CLU21, -1.83% fell 80 cents to $67.64 a barrel. Brent crude BRNV21, -1.60%, the international standard, lost 80 cents to $69.79 a barrel.

In currency trading, the U.S. dollar USDJPY, -0.22% fell to 109.36 Japanese yen from 109.56 yen.