Asian stocks follow Wall St lower as stimulus hopes fade

Asian stocks followed Wall Street lower on Thursday as hopes U.S. leaders will agree on a new economic stimulus before the Nov. 3 presidential election faded.

Benchmarks in Tokyo, Hong Kong and Seoul declined. Shanghai advanced.

Wall Street's benchmark S&P 500 index dropped 0.7% on Wednesday after Treasury Secretary Steven Mnuchin said he and congressional leaders were “far apart” on new aid for the struggling U.S. economy. Consumer spending, the main U.S. economic engine, weakened after earlier additional unemployment benefits expired.

Mnuchin “added another nail to the coffin on pre-election stimulus,” said Jingyi Pan of IG in a report.

The Nikkei 225 in Tokyo fell 0.5% to 23,510.15 and the Hang Seng in Hong Kong lost 1.1% to 24,387.54. The Shanghai Composite Index gained less than 0.1% to 3,343.42.

The Kospi in Seoul shed 1% to 2,356.81. The company that manages South Korean boy band BTS made its market debut amid criticism by Chinese internet users after the group’s leader thanked Korean War veterans for their sacrifices. Big Hit Entertainment Ltd.’s share price had doubled by mid-day but ended trading close to their opening price of 270,000 won ($236).

In Sydney, the S&P-ASX 200 gained 0.6% to 6,218.00 while India's Sensex opened down 0.4% at 40,642.27. New Zealand and Southeast Asian markets declined.

Thailand's benchmark lost 0.8% after the government declared a “severe state of emergency" following a rally Wednesday by protesters demanding democratic change.

Early Thursday, Thai police dispersed pro-democracy protesters who camped out overnight outside the prime minister's office to demand his resignation. Police said 20 people were arrested.

On Wall Street, the S&P 500 fell to 3,488.67. The Dow Jones Industrial Average lost 0.6% to 28,514. The Nasdaq composite slid 0.8% to 11,768.73.

Mnuchin and Nancy Pelosi, the speaker of the House of Representatives, talked by phone Wednesday but reached no agreement, according to Pelosi aide Drew Hammill. Mnuchin said it would be difficult to complete a deal before the election.

U.S. companies that rely on consumer spending, banks and technology and communication stocks bore the brunt of the selling.

Investors are swinging between optimism about a possible coronavirus vaccine that helped to propel an earlier market rally and unease about lackluster U.S. economic activity.

Major U.S. companies begin reporting quarterly earnings this week.

Bank of America sank 5.3% after its revenue fell short of analysts’ forecast. Wells Fargo dropped 6% after its earnings were lower than Wall Street expected.

The Federal Reserve has indicated that it will keep interest rates at nearly zero for a while to support the economy, even if inflation hits its target level.

In energy markets, benchmark U.S. crude gained 3 cents to $41.07 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, used to price international oils, added 2 cents to $43.34 per barrel in London.

The dollar gained to 105.25 yen from Wednesday's 105.15 yen. The euro gained to $1.1755 from $1.1753.