Asian markets were mixed Monday following last week's painful global sell-off, with attention on the US presidential election, which comes against a backdrop of rising virus infections across the country and Europe.
After months of rallying from their March lows, equities were brought to a juddering halt in October as new coronavirus cases surge again, forcing governments across Europe to reimpose tough lockdown measures, throwing a tentative economic rebound into chaos and battering oil prices.
British Prime Minister Boris Johnson at the weekend said England would be the latest country to shut up shop as he struggles to temper a second wave, following similar measures by France, Portugal, Austria, Greece and Ireland. Germany, Spain and Italy are also enforcing strict containment measures.
The moves fanned fears that many businesses could go under, with Michael Kill, CEO of the Night Time Industries Association, which lobbies for the entertainment and hospitality sector, saying firms faced "financial Armageddon".
The disease is also rampant across the United States, which last week recorded a world record number of infections, dealing a further blow to Donald Trump's hopes of re-election on Tuesday.
The president continues to trail Joe Biden in national and battleground polls, but markets remain on edge with memories of Trump's surprise win in 2016 in mind, while there are also worries a tight result could be contested.
"This week would have been chaotic for investors at any rate, but viewed through the intensifying pandemic lens as Covid-19 rages in the West, it could spell mayhem," said Axi strategist Stephen Innes. "It might even flip the whole picture upside down for any post-election reflation trade.
"The virus's latest evolution is complicated by a series of stricter lockdowns putting the eurozone in the vanguard of concerns around the fourth-quarter economic implosion, leaning against global risk sentiment."
He added that the result on Tuesday would have a major impact on the size of any expected fiscal stimulus for the US economy.
'Huge' week ahead
Polls suggest a Biden win could come along with a Democratic sweep of both houses of Congress, which would likely see a huge spending package passed, though a win for Republicans in either of the races is expected to see a much smaller sum.
"Whichever way you look at it, this coming week will be huge for US and global markets," Simon Ballard, at First Abu Dhabi Bank Pjsc, said.
All three main indexes on Wall Street finished in the red Friday, with the Nasdaq tumbling more than two percent, ending their worst week and month since March.
Asian markets started brightly Monday, though initial big gains were pared.
Tokyo rose more than one percent, Hong Kong added 0.8 percent and Seoul put on 0.9 percent, with Singapore up 0.7 percent.
Shanghai rose 0.1 percent, with some support coming from data suggesting China's manufacturing sector continued to improve in October.
However, Taipei, Jakarta and Wellington all fell.
Oil prices tumbled more than three percent as the reimposition of lockdowns causes worries about demand, while selling was also fanned by a pick-up in Libyan output in the wake of a peace deal to end almost 10 years of civil war.
Key figures around 0230 GMT
Tokyo – Nikkei 225: UP 1.4 percent at 23,303.42 (break)
Hong Kong – Hang Seng: UP 0.8 percent at 24,306.21
Shanghai – Composite: UP 0.1 percent at 3,226.50
Euro/dollar: DOWN at $1.1644 from $1.1651 at 2050 GMT on Friday
Dollar/yen: DOWN at 104.65 yen from 104.67 yen
Pound/dollar: DOWN at $1.2938 from $1.2954
Euro/pound: UP at 90.00 pence from 89.90 pence
West Texas Intermediate: DOWN 3.4 percent at $34.56 per barrel
Brent North Sea crude: DOWN 3.1 percent at $36.76 per barrel
New York – Dow: DOWN 0.6 percent at 26,501.60 (close)
London – FTSE 100: FLAT at 5,577.27 (close)