Asian stocks are following Wall Street's sharp sell-off as concerns about rising coronavirus infections and new US shutdowns hose down earlier investor enthusiasm about vaccine developments.
Bearish sentiment triggered a late-session retreat in stock markets on Wednesday after a surge in new COVID-19 infections prompted New York City, which has the largest school district in the United States, to halt in-person learning starting from Thursday.
The news of the shutdowns overshadowed Pfizer Inc's announcement that its COVID-19 vaccine was 95 per cent effective and that the company would apply for emergency US authorisation within days.
Pfizer's vaccine has a similar effectiveness as the candidate developed by Moderna Inc.
"It's like a seesaw, the fight between the growth of COVID and the excitement about the vaccine is really weighing on the market," said Hilary Kramer for Kramer Capital Research in New York.
Australia's S&P/ASX 200 lost 0.5 per cent in early trading, while Hong Kong's Hang Seng index futures lost 0.02 per cent. Japan's Nikkei 225 fell 0.4 per cent.
New York City joined other large school districts in cities like Boston, Detroit, Las Vegas, Philadelphia that have recently cancelled in-person learning due to rising virus cases.
Forty-one US states have reported record daily increases in cases in November, 20 have registered record daily deaths and 26 have reported new peaks in hospitalisations.
Despite upbeat vaccine developments, the prospect of roll-backs of reopenings and new lockdowns weighed on market participants.
All 11 major sectors in the S&P 500 closed in negative territory, with energy shares suffering the biggest loss.
The Dow Jones Industrial Average fell 1.16 per cent, the S&P 500 lost 1.16 per cent, and the Nasdaq Composite dropped 0.82 per cent.
Richmond Federal Reserve President Thomas Barkin said allowing Fed emergency lending programs to sunset on December 31 could pose risks to financial markets, especially with the pandemic escalating.
The dollar moved off earlier lows following better-than-expected US housing data, with the greenback still on pace for its fifth straight decline as the Pfizer news gave investors an appetite for some risk taking.
The dollar index fell 0.043 per cent, with the euro down 0.05 per cent to $1.1855.
US Treasury yields reversed early declines on optimism about a potential vaccine and after a weak 20-year bond auction diminished the appeal of the safe-haven debt.
Benchmark 10-year notes last fell 1/32 in price to yield 0.875 per cent, from 0.872 per cent late on Tuesday.
Oil prices advanced as the vaccine news buoyed investor appetite, along with hopes OPEC and its allies will delay a planned increase in oil output.
US crude settled up 0.94 per cent at $US41.82 per barrel and Brent was at $US44.34, up 1.35 per cent on the day.