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Asian stocks set to dip after U.S. halts stimulus talks

NEW YORK (Reuters) - Asian stocks were set to open lower on Wednesday, weighed by a weaker Wall Street finish after U.S. President Donald Trump dashed hopes for a fourth stimulus package with a tweet.

FILE PHOTO: A man wearing a protective face mask, following an outbreak of the coronavirus disease (COVID-19), is reflected in a screen displaying NASDAQ movements outside a brokerage in Tokyo, Japan March 16, 2020. REUTERS/Edgard Garrido

Futures for the S&P 500 EScv1 fell 0.58% in early trading, while Australia's S&P/ASX 200 futures YAPcm1 and Japan's Nikkei 225 futures NKc1 lost 0.29% and 0.17%, respectively.

Wall Street had initially moved higher on Tuesday on news that President Trump had returned to the White House from his COVID-19 hospitalization, removing some of the political uncertainty that hit investor sentiment last week.

However, those gains sharply reversed when the president announced on Twitter that he had halted negotiations for additional stimulus until after the election.

Reviving the political uncertainty, a growing number of senior U.S. government official have tested positive for coronavirus after President Trump disclosed his own diagnosis. Most recently, most members of the Joint Chiefs of Staff stopped in-person meetings and went into quarantine after a coast guard official tested positive.

Earlier on Tuesday, Federal Reserve Chairman Jerome Powell warned that the world’s largest economy was in for a weak recovery without more fiscal support.

Central bank watchers will get a more detailed look at board members’ views on the economy when the Fed releases its minutes early Wednesday.

The Dow Jones Industrial Average .DJI fell 1.34%, the S&P 500 .SPX lost 1.40% and the Nasdaq Composite .IXIC dropped 1.57%.

MSCI's gauge of stocks across the globe .MIWD00000PUS shed 0.64%.

Spot gold XAU= also fell on the news, dropping 1.4% to $1,886.01 per ounce by the end of the session and continued to slide after hours.

Tuesday’s declines may have been an overreaction as some market players had already priced in a failure in talks between Republicans and Democrats.

“Our view for some time was a stimulus agreement was unlikely before the 3 November presidential election,” Head of International Economics at Commonwealth Bank of Australia Joseph Capurso said in a note.

The Trump administration’s about-face also fueled safe-haven demand for the dollar and U.S. Treasuries.

The dollar index =USD rose 0.468%, with the euro EUR= down 0.04% to $1.1729.

On Tuesday, U.S. 10-year yields US10YT=RR rose to 0.773% from 0.762% late on Monday while 30-year yields US30YT=RR grew to 1.585%, up from 1.567%.

Oil prices closed higher as hurricanes off the Gulf of Mexico and a worker strike in Norway threatened to curb supply, but post-close trading points to a lower open.

Brent crude futures LCOc1 fell to $42.19 a barrel in after-hours trading after settling at $42.65, and U.S. West Texas Intermediate (WTI) crude CLc1 dropped to $40.13 a barrel from $40.67.

Reporting by Imani Moise; Editing by Sam Holmes