Asian markets were mixed on Tuesday and oil extended losses as the impact of the fast-spreading Delta coronavirus variant on the global recovery fuelled concerns the outlook might not be as rosy as initially hoped. While corporate earnings continue to impress, trader optimism has taken a knock after a series of below-forecast readings from the world’s biggest economies including crucial growth drivers, the United States and China. At the same time, long-running fears that inflation could spike for months to come is fanning talk that central banks will be forced to taper their ultra-loose monetary policies to prevent prices spiralling, taking away a major pillar of the more than year-long rally in equity markets. “I don’t think the market is concerned about Delta as much as it’s concerned about how it impacts inflation,” Shana Sissel, of Spotlight Asset Group, told Bloomberg TV. “The longer we have Delta spread globally, the longer the supply chain disruptions will continue.” In a sign that markets are increasingly on edge over the outlook, the yield on 10-year US Treasuries, a key gauge of growth expectations, fell below 1.2 percent. That came after US growth missed expectations and figures showed growth in factory activity slowing. Meanwhile, a surge in Covid cases across China is increasing worry on trading floors, with millions put into lockdown. In the latest development, leaders in Wuhan said they would test its entire population of 11 million after the city where the disease emerged reported its first local infections in more than a year. “The rise in US cases, and (Southeast Asia’s) situation, is well known, but what is spooking markets is China,” said OANDA’s Jeffrey Halley. “It’s not a huge reach to extrapolate even more supply chain disruptions, especially if it proves as elusive to control for Chinese authorities as it has to officials globally.” Hong Kong and Shanghai also continue to be buffeted by uncertainty caused by China’s crackdown on the tech, private tuition and property sectors, which has raised worries that officials will target other industries. Gaming firms appeared to be next in the crosshairs after a state-run media commentary described online games as “spiritual opium”. The Economic Information Daily, an arm of the government’s Xinhua news agency, complained about “widespread” online gaming addiction among children. It warned that “no industry or sport should develop in a way that wrecks a generation”. The comments battered already under-pressure Tencent, which sank more than six percent in Hong Kong, while rivals NetEase and XD Inc shed around eight percent. News that Hong Kong was to ease travel restrictions, which could provide a boost to the fragile economy, was unable to stop the city’s Hang Seng Index from suffering another drop. Tokyo, Shanghai, Singapore, Seoul and Wellington also dipped. Sydney also fell, though buy-now, pay-later company Afterpay jumped more than 10 percent — having soared almost 20 percent Monday — after US digital payments platform Square, led by Twitter founder Jack Dorsey, said it would buy it for $29 billion. There were gains in Seoul, Taipei, Manila, Mumbai, Bangkok and Jakarta. London, Paris and Frankfurt were all up in the morning. Oil prices edged up but did not make much of a dent in Monday’s more than three percent as the reimposition of lockdowns and other restrictions in several countries including China raised demand concerns. “Oil has defied gravity so far this year, but the Delta variant’s impact has started to cap its advance,” said Oversea-Chinese Banking Corp’s Howie Lee. “It does look as though Asian oil consumption has started to dither and prices will probably consolidate until there is a clearer picture.”