GLOBAL MARKETS-Stocks falter as anxiety grows over second coronavirus wave

By Swati Pandey and Kane Wu
SYDNEY/HONG KONG, May 12 (Reuters) - Asian shares tumbled on
Tuesday on growing worries about a second wave of coronavirus
infections after the Chinese city where the pandemic originated
reported its first new cases since its lockdown was lifted.
European markets were set to open lower with EUROSTOXX 50
futures STXEc1 off 0.52% and FTSE futures FFIc1 down 0.22%.
E-Mini futures ESc1 for the S&P 500 slipped 0.68%.
The central Chinese city of Wuhan reported five new cases on
Monday, casting doubts over efforts to lower coronavirus-related
restrictions across the country as businesses restart and
individuals went back to work.
"Markets have been torn between optimism on the tentative
re-opening of some economies and caution on the still grim
economic data," said OCBC Investment Research in a Tuesday
markets note.
"Any recovery in equity markets is likely to be fragile for
now, as markets will watch for cracks in the financial system
and elsewhere in the economy as virus infections climb."
MSCI's broadest index of Asia Pacific shares outside of
Japan .MIAPJ0000PUS stumbled more than 1%, snapping two
straight sessions of gains.
Hong Kong's Hang Seng index was among the hardest hit
.HSI , down 1.78% followed closely by Australia .AXJO , off
1.24%. South Korea's KOSPI .KS11 faltered 0.85%.
China's blue-chip CSI300 index .CSI300 was off 0.5% after
the country's factory prices fell at the sharpest rate in four
years in April, worse than analysts' expectations. As countries around the world gradually ease restrictions in
an effort to restart their economies, investors are becoming
anxious about a second wave of infections.
Germany's Robert Koch Institute reported that the
"reproduction rate" - the number of people each person infected
with the coronavirus goes on to infect - had risen to 1.1. Any
rate above 1 means the virus is spreading exponentially.
The worrisome news follows a fresh outbreak in night clubs
in South Korea and record number of new cases in a day in
Russia.
“The re-opening of the global economy will likely follow the
shape of activity in China. Businesses there have restarted
operations but are not necessarily at capacity," Bob Baur, Chief
Global Economist at Principal Global Investors.
“While businesses have mostly restarted, China's households
stay cautious. Restaurants are open, but seats are empty.
Vehicle sales bounced off the bottom but are well below normal.
Households in the U.S. and Europe will surely mirror this wary
attitude even as activity picks up.”
Fund managers expect equity markets to stay the course
through June and avoid retesting March lows given the massive
monetary stimulus provided by the U.S. Federal Reserve and other
major central banks.
Late on Monday, the Fed said it would start purchasing
shares of exchange-traded funds that invest in bonds, one of
several tools to improve market functioning in the wake of the
coronavirus pandemic.
Markets are also keeping a wary eye on China's trade
relations with the United States as well as Australia.
U.S. President Donald Trump said on Monday he opposed
renegotiating the U.S.-China "Phase 1" trade deal while
Australian media reported that China has suspended imports from
four abattoirs in an escalation of tensions. The Australian and New Zealand dollars slipped on Tuesday as
risk sentiment was knocked and in part due to new Chinese
restrictions on Australian beef exports. On the policy front, investors will be looking to comments
from Fed officials. James Bullard and Patrick Harker are due to
make remarks at 1300 GMT and 1400 GMT, respectively, ahead of a
highly anticipated speech from chairman Jerome Powell on
Wednesday.
The euro EUR= slipped below $1.08 for the first time in
almost a week and the Japanese yen nursed an overnight loss of
about 1% to sit at 107.39 per dollar, the bottom end of a range
it has kept since mid April.
In commodity markets, oil prices climbed following an
unexpected commitment from Saudi Arabia to deepen production
cuts in June. O/R
Brent crude LCOc1 futures climbed to a high of $30.11 a
barrel and were up 0.2%, or 6 cents, at $29.69 at 0447 GMT,
reversing some of the previous session's losses. The benchmark
fell $1.34 on Monday.
U.S. West Texas Intermediate (WTI) crude CLc1 futures were
up 0.91%, or 23 cents, at $24.37 after touching a high of
$24.77.
Spot gold XAU= was barely changed at $1,696.6 an ounce.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Global assets http://tmsnrt.rs/2jvdmXl
Global currencies vs. dollar http://tmsnrt.rs/2egbfVh
Emerging markets http://tmsnrt.rs/2ihRugV
MSCI All Country Wolrd Index Market Cap http://tmsnrt.rs/2EmTD6j
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>