GLOBAL MARKETS-Asia stocks set to track soft Wall Street lead amid pandemic worries

* U.S. deficit financing drives up long-dated yields
* Oil rally ends as glut grows
* European shares hobbled by recession forecast
* Japanese markets reopen after holiday

By David Henry
NEW YORK, May 6 (Reuters) - Asian stocks were set to come
under pressure on Thursday as downbeat economic data pushed
investors to safe havens and growing worries about falling
demand sent oil prices lower.
Traders continue to be torn between signs that consumers and
businesses are emerging from the economic paralysis caused by
the coronavirus and the reality that the pandemic continues to
choke global demand.
Also in focus are fresh hostilities between Beijing and
Washington after U.S. President Donald Trump said he was
watching closely whether China would meet its commitments to
increase U.S. goods purchases under the Phase 1 trade
deal. E-mini futures for the S&P 500 ESc1 fell 0.28%.
Japan's Nikkei 225 futures NKc1 fell 0.23% while Hong
Kong's Hang Seng index futures .HSI HSIc1 lost 0.76%.
Oil, which had rallied for a week as economies slowly
reopened, dropped as much as 4% on Wednesday after U.S. crude
stockpiles ticked up and diesel inventories swelled, offsetting
OPEC-led cuts in production.
Equities investors are expected on Thursday to face more of
the kind of dismal economic data that chilled sentiment on
Wednesday and stopped the oil rally.
Chinese trade data is expected to show double-digit
percentage declines in exports and imports because of the damage
from the pandemic to global demand and manufacturing supply
chains. Analysts at ANZ Bank have warned that Asian equity prices
show excessive optimism about corporate performance that could
be dashed by first-quarter earnings results. Markets had been upbeat earlier in the week as governments
slowly reopened their economies. But that faded on Wednesday in
the face of a chilling euro zone GDP forecast and a report that
U.S. private employers laid off a record 20.2 million workers in
April. Wall Street was mostly lower on Wednesday. The S&P 500 index
closed 0.7% weaker after a late-day selloff. The Nasdaq
Composite .IXIC added 0.51% as traders bet on tech and other
so-called stay-at-home sectors, while the Dow Jones Industrial
Average .DJI lost 0.91%.
"Looking across the markets as we close off the U.S. session
and hurtle in Asia trade, we see price action has been soggy,
and the bears will probably just about take this one," Chris
Weston, Melbourne-based head of research at broker Pepperstone,
said in a Thursday note to clients.
In currency trading, safe-havens rose on Wednesday. The yen
hit a seven-week high against the dollar and a 3-1/2-peak versus
the euro.
Against a basket of peers, the dollar rose for a third
session.
"Safe havens are likely to hold the upper hand as many brace
for the impact of the late week jobs data," said Joe Manimbo,
senior market analyst, at Western Union Business Solutions in
Washington.
The U.S. government jobs report due on Friday is expected to
show the unemployment rate jumped to 16% in April, which would
shatter the post-World War Two record of 10.8% set November
1982. A weekly U.S. government report due on Thursday is forecast
to show another 3 million people filed claims for unemployment,
adding to the 30.3 million claims of the previous few weeks.
The European Commission on Wednesday forecast the euro zone
economy would contract by a record 7.7% this year, and warned
that public debt and budget deficits will balloon on spending to
offset the damage from the pandemic.
That undercut optimism, sending the pan-European STOXX 600
index .STOXX down 0.4%.
MSCI's gauge of stocks across the globe .MIWD00000PUS shed
0.42% on Wednesday.
Longer-dated U.S. Treasury yields jumped to three-week highs
on Wednesday after the government sharply increased the size of
its long-dated debt auctions to finance its expanding deficit.
Benchmark 10-year note yields US10YT=RR jumped as high as
0.743% on Wednesday, the most since April 15.
Gold fell further on Wednesday under the pressure of a
stronger dollar and expectations that supplies will grow as
bullion refineries resume operations. Spot gold, which had
dipped 1.1% in the New York afternoon, XAU= added 0.1% to
$1,686.54 an ounce.

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