Most Asian markets fell on Monday following another disappointing performance on Wall Street with investors concerned about an uptick in coronavirus infections in Europe and the US, as well as the lack of movement in Washington on a new stimulus.

After months of big gains around the world, fuelled by government stimulus and central bank largesse, equities are beginning to wobble, with analysts warning traders were taking profits as they consider the rally may have been overblown.

A key worry is a spike in new virus cases in key economies that have led to containment measures being re-imposed.

Britain’s government, noting hospitalisation rates are doubling every eight days, said fresh restrictions could be put in place across England, with several cities already seeing some measures.

Secretary of State for Health and Social Care Matt Hancock said the country was at a “tipping point”.

France has seen fatalities creep back up, and a million people in and around Madrid were under new “stay-at-home” orders.

New infection rates in the US are also picking up again after dropping for weeks.

Stephen Innes at Australia-based AxiCorp Financial Services Pty Ltd said: “Investors remain confused about which way to move … as lockdown fears take charge with the UK government sounding alarm bells as the Covid-19 curve moves in the wrong direction.

“After the initial economic bounce from full-blown lockdowns, both the UK and Europe’s economic trajectory could be entering a gloomy second phase characterised by ongoing social distancing, elevated unemployment, and increasing damage to the supply side.”

Hong Kong led losses, dropping more than two per cent with market heavyweight HSBC tumbling around five per cent to a 25-year low on fears it could be added to a Chinese list of firms deemed a threat to national security and following news it had been accused of allowing fraudulent activity to go unpunished.

Shanghai, Sydney, Seoul, Taipei, Wellington and Jakarta were also well down, with smaller losses in Singapore, though Manila, Mumbai and Bangkok were marginally higher.

London, Paris and Frankfurt all tumbled in morning trade.

Investors are keeping an eye on Capitol Hill where US lawmakers are still nowhere near agreeing a new rescue package for the beleaguered economy, despite millions of US citizens struggling to make ends meet.

While US President Donald Trump has urged Republicans to lift their $500 billion offer, they remain miles apart from the Democrats, who are calling for around $2 trillion to be spent.

US Federal Reserve (Fed) boss Jerome Powell has warned that while the central bank can keep interest rates low and provide financial support to businesses, the economy needs a new shot in the arm from Congress to get its recovery back on track.

National Australia Bank’s Rodrigo Catril said: “Elevated equity valuation probably also means that investors have become a bit more sensitive to uncertainty.

“So on this score we have to add the US elections early in November, plus the Fed’s decision to refrain from increasing its bond-buying at the September FOMC [Federal Open Market Committee] meeting … and the continued stalemate in negotiations over a new fiscal package.”

Traders will be closely watching congressional testimony by Powell later in the week for fresh clues about the Fed’s future policy plans.