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GLOBAL MARKETS-Global stocks retreat as investors fret over coronavirus relapse

Published 06/18/2020, 02:19 PM
Updated 06/18/2020, 02:20 PM
© Reuters.
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* S&P 500 futures, MSCI ex-Japan Asia shares fall
* Investors fret over rise in infections in U.S, China
* Australian dollar hit by weak local jobs data
* Asian stock markets: https://tmsnrt.rs/2zpUAr4

By Hideyuki Sano and Katanga Johnson
TOKYO/WASHINGTON, June 18 (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 EScv1 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
Morgan Stanley 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."


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 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 JPY= 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 AUD=D4 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. Oil prices also dropped with U.S. crude futures CLv1
falling 1.9% to $37.49 per barrel, while international benchmark
Brent LCOc1 lost 1.4% to $40.14 a barrel.

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Second wave in the United States https://tmsnrt.rs/2BmXZKv
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(Editing by Sam Holmes and Lincoln Feast.)

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