Asian markets fell Tuesday following a sharp sell-off in New York and Europe that was fuelled by fears a coronavirus resurgence will force fresh economically painful containment measures.

Traders have also given up almost any hope for a new US stimulus package being passed before next Tuesday's election, with Democrats and Republicans blaming each other, though there are still expectations a new deal will be agreed afterwards.

The need for a big-spending rescue for hard-hit Americans is being highlighted by a big jump in new infections across the country that observers fear will deal a blow to an already shaky economic recovery.

Data this week is expected to show record US growth in the third quarter thanks to a multi-trillion-dollar stimulus agreed earlier this year alongside huge Federal Reserve support.

However, that follows a record contraction in the second quarter, while economists have tipped the economy to shrink this year.

"The second and third wave spread of Covid-19 is possibly triggering a point of no return for some industries as the economic damage borders on irreversible," said Axi strategist Stephen Innes. "The Covid-19 induced downward spiral continues accelerating."

With an eye on next week's vote, he added: "We should expect price action to remain choppy in the days ahead, with investors very reluctant to put on any significant risk ahead of what promises to be a headline heavy week or two."

David Kelly, at JP Morgan Asset Management, added: "A stimulus bill in the lame-duck session is urgently needed and could be supplemented by a more comprehensive measure when the new Congress meets, early in 2021."

On Wall Street, the Dow suffered its worst day since early September, dropping more than two percent while the S&P 500 and Nasdaq also suffered sharp losses. That came after Frankfurt was hammered more than three percent, with Paris and London shedding more than one percent.

And the selling continued in Asia, though the retreat was not as painful.

Tokyo and Shanghai fell 0.3 percent, along with Taipei and Singapore. Hong Kong sank 0.4 percent, while Sydney, Wellington and Manila were all down more than one percent.

Seoul edged up slightly, though, after data showed the South Korean economy grew more than expected in the third quarter thanks to a big jump in exports.

"The Covid case news flow has clearly resonated," Chris Weston, head of research at Pepperstone, said in a note.

Tough containment measures may return
With virus infections spiking across Europe and the US, there are fresh fears of a return to tough containment measures that battered the world economy earlier this year. Photo: AFP / Tiziana FABI

"The reflation trade which was working so beautifully is being part unwound -- not because of election repricing, but due to the new wave of Covid cases."

Chinese e-payments giant Ant Group was planning to stop taking orders for the Hong Kong leg of its $34 billion mega-IPO owing to it being massively subscribed, Bloomberg News reported.

The dual listing in Hong Kong and Shanghai is tipped to be the biggest in history and would value the firm at about $315 billion, bigger than Wall Street financial titans Goldman Sachs and JP Morgan Chase. Its shares are slated to debut on November 5.

Tokyo - Nikkei 225: DOWN 0.3 percent at 23,428.70 (break)

Hong Kong - Hang Seng: DOWN 0.4 percent at 24,826.89

Shanghai - Composite: DOWN 0.3 percent at 3,242.19

Euro/dollar: UP at $1.1823 from $1.1808 at 2115 GMT

Dollar/yen: DOWN at 104.75 yen from 104.84 yen

Pound/dollar: UP at $1.3034 from $1.3021

Euro/pound: UP at 90.71 pence from 90.67 pence

West Texas Intermediate: UP 0.4 percent at $38.72 per barrel

Brent North Sea crude: UP 0.4 percent at $40.62 per barrel

New York - Dow: DOWN 2.3 percent at 27,685.38 (close)

London - FTSE 100: DOWN 1.2 percent at 5,792.01 (close)

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