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Global stocks retreat as investors fret over coronavirus relapse

Published 06/17/2020, 08:04 PM
Updated 06/18/2020, 02:25 AM
© Reuters. A man wearing a protective face mask, following the coronavirus disease (COVID-19) outbreak, is silhouetted in front of a stock quotation board outside a brokerage in Tokyo

© Reuters. A man wearing a protective face mask, following the coronavirus disease (COVID-19) outbreak, is silhouetted in front of a stock quotation board outside a brokerage in Tokyo

By Hideyuki Sano and Katanga Johnson

TOKYO/WASHINGTON (Reuters) - Asian stocks and Wall Street futures fell on Thursday as spiking coronavirus cases in some U.S. states and in China dented hopes of a quick global economic comeback from the pandemic.

S&P 500 mini futures fell as much as 1.4% in early Asian trade and last traded down 0.7% while MSCI's broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) shed as much as 1% before paring losses to 0.15%.

Japan's Nikkei (N225) lost 1.3% while mainland China bucked the trend, with blue-chip CSI300 shares (CSI300) posting gains of 0.6%.

On Wall Street, the S&P 500 (SPX) lost 0.36% on Wednesday but tech-heavy Nasdaq (IXIC) added 0.15% due to hopes of increased demand for various online services due to the epidemic.

The daily count of infections hit a new high in California and Texas, the two most populous states in the country, while Florida, the third largest, also recorded its second-highest daily increase.

Several other U.S. states including Oklahoma, where President Donald Trump plans a campaign rally on Saturday, reported a surge in new infections.

In China, Beijing cancelled scores of flights, shut schools and blocked off some neighbourhoods as it ramped up efforts to contain a coronavirus outbreak that has fanned fears of wider contagion.

"It is a big shock to markets that China, which appears to have successfully quashed the disease, is seeing a second wave. And in the U.S. we see record cases in many states," said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ (NYSE:MUFG) Morgan Stanley (NYSE:MS) Securities.

"All this suggests that the more you re-start the economy, the more infections you have. People have thought the economy will quickly recover in July-September after dismal April-June. But that is now becoming uncertain."

Graphic: Second wave in the United States, https://fingfx.thomsonreuters.com/gfx/mkt/qzjpqjxjrvx/20618C.png

Some investors also worried about further paralysis in Washington as Trump's former national security adviser John Bolton accused him of sweeping misdeeds that included explicitly seeking Chinese President Xi Jinping's help to win re-election.

Border tensions between North and South Korea, and between India and China, also helped sour sentiment for risky assets.

Investors rushed to the safety of bonds, with the 10-year U.S. Treasuries yield (US10YT=RR) falling 2 basis points to 0.710%.

"In the near-term, we have had a lot of risk-off factors including Bolton and geopolitical tensions in Asia," said Masahiko Loo, portfolio manager at AllianceBernstein (NYSE:AB) in Tokyo.

"But on the other hand, risk assets are supported by ample liquidity from central banks. I don't see that changing yet and do not expect major sell-off in risk assets."

In the currency market, the safe-haven yen rose about 0.2% to 106.81 per dollar while the U.S. dollar also firmed against risk-sensitive currencies.

The euro was on back foot at $1.1250 (EUR=) ahead of a video conference between EU leaders on Friday, where they are expected to discuss a proposed 750 billion euro aid package to help countries deal with fallout from the coronavirus crisis.

The Australian dollar fell 0.2% to $0.6867, hit by worse than expected employment data.

Australia's unemployment rate jumped to the highest in about two decades in May as nearly a quarter of a million people lost their jobs due to the coronavirus pandemic-driven shutdowns.

© Reuters. A man wearing a protective face mask, following the coronavirus disease (COVID-19) outbreak, is silhouetted in front of a stock quotation board outside a brokerage in Tokyo

Oil prices also dropped with U.S. crude futures falling 1.9% to $37.49 per barrel, while international benchmark Brent (LCOc1) lost 1.4% to $40.14 a barrel.

Latest comments

The global flu hoax designed to destabilize and control the population. Rise up from this fear.
we are not in a second wave because its still the first wave
But what if the first wave comes before the second wave? THEN WE’RE ALL SCREWED!!!
Check the global stats on worldometer b4 u write and read this article...again and again it is obvious that the media is paid for fearmongering...
Green af lol
i stay away from stocks. also short for the Dax and us500. its too high
its going up. and u short???
It's the 30 and under crowd that is gaining exposure. They should have better outcomes than the Nursing home community, that I guess was the 1st wave. Might even be a good thing for herd immunity.
Don't trust China on anything they report.
So more people are infected?
when did we ever got out of 1st wave? lmao.
No second wave, that is false
What makes you know that? The number of new cases each dsy is a fact. Unless you simply do not believe the institutions that are tracking this data?
Thom did you also tell us how high the market is now...if this a bear trap I'll take em all!!! Thanks
Republican backlash, rift in Republican leadership and Bolton's book vs Trump. Bad signals for his reelection. market nervous. uncertainty rules for now
Bolton is a fool
nonesense
Two days fine and third day again covid scare .... fourth day fine again even no vaccine news and then fifth day again covid scare !!What a nice drama All politics and market manipulation under covid disguise
It's normal to see the number of cases increasing when you start to test people. Same thing is happening everywhere in the world. There is no 2nd wave.
Nice try. This was debunked by every doctor in the country today. You’re spreading fake news.
Not necessarily true since hospitalizations are increasing.
So when it drops its always COVIDs fault?
Poor Covid.
Market will see a fall again.There was article in the Financial Times stirring feara that Warren Buffet has lost touch.We think he may be waiting for the second drop.He hasnt lost his value investingway.Bill Ackman bought and called B Hathaway cheap, then less than two weeks later he sold. He has NO investing style.Buy the next DIP.Dividend stocks for now
Buffet has his largest cash holding ever. He thinks this market is way overpriced. I agree with him but it's still riding high on the Fed and Congress 's cash injections.
I think there will be another rally after this correction. Improving economic indicators every week, FED support, and vaccine research progress will make it very difficult for the market to crash again.
We need to reckon Communist China for this mess.
Trump is the best President in the history of the USA.
These are cases not hospitalizations. 1000 point pump on Monday.
CNN and fake news will always find a way to bombard people with news about second, third, and even fourth waves if necessary to make Trump look bad. They are criminals, responsible for unnecessary shutdowns, bankruptcies, unemployment, fear, and anxiety.. just to get Trump out.
two words ...black swan..curb your hatred and you will see much better..and thats the truth.
Finally! Someone finally gets it. Ive been touting this for a while and have only been met with opposition.
Trump is the best President in the history of the USA.
🐻 day
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