Delta Variant Sweeps Asia as Signs of Economic Slowdown Appear

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Principal Points

• Delta strain concerns are looming across Asia, Wuhan reports a first positive case in over a year
• Countries like China and South Korea stand to suffer an economic downfall as the virus spreads

The more transmissible variant of the coronavirus, the Delta strain, is surging through Asia over the recent weeks, with record numbers of infections. The sharp spike in confirmed cases, coupled with a tepid rate of vaccination, begin to dent the economic recovery of the continent.

In an otherwise swift economic rebound around the globe, Asia has emerged as a vulnerable region as new pandemic restrictions threaten to overturn progress in manufacturing and slow down exports that have powered the recovery of countries like China and South Korea.

In signs of a stalling economic activity, China’s private and official manufacturing purchasing managers’ indexes fell to their lowest level in over a year in July.

Chinese authorities are struggling to contain the spread of the virus as the Delta strain has already appeared in at least 14 provinces. The unexpected return of the virus in China marked the country’s worst coronavirus outbreak in more than a year.

China’s Wuhan city, where the virus first emerged in late 2019, has been reporting zero confirmed cases every day since May 2020. On Monday, however, authorities confirmed three cases of the Delta variant. To counter the growing threat of infectious disease, Wuhan authorities will test all 12 million residents in the city.

“To ensure that everyone in the city is safe, city-wide nucleic acid testing will be quickly launched for all people to fully screen out positive results and asymptomatic infections,” Wuhan official Li Qiang told a news briefing.

Bitcoin Prices Experience a Decline

In the West, higher vaccination levels are believed to offset an otherwise significant Covid-19 wave. In the US, which has fully vaccinated about 50% of its population, businesses and consumers are now returning to normal economic activity. The country, however, reported on Tuesday the number of infected people has increased by 149,788 on the day. The figure lifted the seven-day average to 92,005 confirmed cases, up from 85,866 a day earlier.

Even though the US is now sitting at a seven-day average that is nine times higher what it was at the start of July, the stock market has been moving steadily to the upside. On Tuesday, the broad-based S&P500 index set a closing high, boosted by strong earnings reports and a continued slew of positive economic data.

On Wednesday, global markets are rising broadly. Asian stocks advanced and US futures were barely changed. Dow futures are moderately lower, along with S&P500 futures. Futures contracts tied to the Nasdaq Composite indicate a slightly higher open at the bell today.

In Europe, bourses across the continent are hovering at new highs with the pan-continental Stoxx 600 Europe closing in on the 470-threshold. The German DAX pared yesterday’s losses and is now leading the major averages with a gain of about 0.80%.

In cryptocurrency action on Wednesday, major digital assets are lacking upside momentum as crypto participants struggle to support the recent rally. Over the past three days, bitcoin’s price has declined by about 8%. The leading digital currency is now trading around $38,000 per coin.