By Gina Lee
Investing.com – Asia Pacific stocks were mixed on Tuesday morning, with investors bracing for a key runoff election in the U.S. state of Georgia. The ever-rising number of COVID-19 cases and the ensuing delay in the global economic recovery also dampened investor sentiment.
Japan’s Nikkei 225 inched up 0.01% by 10:15 PM ET (3:15 AM GMT), with Japanese Prime Minister Yoshihide Suga to decide on the declaration of a fresh state of emergency in the Greater Tokyo area on Thursday.
South Korea’s KOSPI edged up 0.17% while in Australia, the ASX 200 was down 0.26%.
Hong Kong’s Hang Seng Index edged down 0.16%. The social-distancing measures currently in place, including a ban on public gatherings of more than two people and restaurant dine-in services after 6pm, were extended for another two weeks on Monday.
China’s Shanghai Composite was down 0.41% while the Shenzhen Component jumped 1.08%. The New York Stock Exchange reversed its earlier decision to delist China Mobile Ltd (HK:0941), China Telecom Corp Ltd (NYSE:CHA) and China Unicom Hong Kong Ltd (NYSE:CHU).
The election results in Georgia, due to take place later in the day, will determine whether the Democrats or Republicans control the Senate. The party that wins either or both Senate seats up for grabs will determine the ease with which President-elect Joe Biden can implement his agenda, including fiscal stimulus, higher taxes and more regulation, when his administration takes office later in the month.
“2021 starts with a bang with pivotal political and economic news for markets to digest. The undisputed highlight will be the result of the Senate seat run-off elections in Georgia,” ING chief international economist James Knightley said in a note.
“If the Democrats win both seats this should lead to the most substantial 2021 fiscal stimulus. Nonetheless, it could be the excuse for a near-term consolidation in risk markets after a strong post-election rally,” the note added.
However, incumbent President Donald Trump’s call to pressure Georgia Secretary of State Brad Raffensperger to "find" votes to overturn his loss to Biden in the state unnerved some investors ahead of the election.
Congress is also due to count the electoral votes and certify Biden the winner of the Nov. 3 presidential election on Wednesday. Several Republicans have vowed to vote against the certification, and Trump supporters expected to flock to Washington D.C. in protest.
Meanwhile, the ever-rising number of COVID-19 cases globally is dampening the enthusiasm triggered by the rollout of COVID-19 vaccines that began in December.
The spread of the B177 strain of the virus, which is more infectious that the original, also promoted U.K. Prime Minister Boris Johnson on Monday to order a new, tougher national lockdown. Although he was cautious about giving a firm lockdown timetable Johnson said it could be possible to start moving out of lockdown by mid-February.
Despite the grim message for the short term, some investors were optimistic that it would be consigned to the first quarter of the year.
“The first quarter will no doubt be tough. The spread has been horrific throughout the festive period and restrictions are being tightened and extended. The toll on the economy will be significant but, thanks to the vaccine, consigned mostly to the first quarter,” Oanda senior market analyst Craig Erlam told Bloomberg.
On the data side, the Federal Reserve will also release the minutes from its December meeting on Wednesday. U.S. employment data for December, including manufacturing and non-farm payrolls, will be released on Friday.