SYDNEY (Reuters) – Asian equity markets started the week cautiously on Monday when the relentless spread of the coronavirus finally caused investors to question its optimism in the global economy, benefiting safe harbor bonds and the US dollar.
FILE PHOTO: A man wearing a protective face mask, after the outbreak of coronavirus disease (COVID-19), walks in front of a stock listing table outside a brokerage in Tokyo, Japan, May 18, 2020 REUTERS / Kim Kyung-Hoon
MSCI’s broader Asia-Pacific index of stocks outside Japan fell 0.6% and further from a four-month high last week. Japan’s Nikkei shed 1.3% and Chinese blue chips 0.6%.
In a more promising signal, E-Mini futures for the S&P 500 recovered their initial losses to rise 0.3% and EUROSTOXX 50 futures added 0.2%. FTSE futures fell 0.2%.
Wall Street wobbled on Friday when some US states reconsidered their reopening plans. The global COVID-19 death toll reached half a million people on Sunday, according to a Reuters count.
About a quarter of all deaths so far have been in the United States, and cases increased in a handful of southern and western states that reopened before.
“The rise in COVID-19 infection rates in the United States has affected momentum in all markets despite improvements in the global economy, which continues to exceed most data expectations,” analysts at JPMorgan wrote. in a note.
“Our strategists remain optimistic and recommend buying in sauces but also selectivity,” they added. “Traditional hedges like JPY versus USD, USD versus EM FX, gold and quality stocks are still outperforming this month. We maintain an overweight to US stocks, but we move emerging market stocks to neutral and keep US credit neutral. ”
Sovereign bonds benefited from the switch to security with 10-year US bond yields falling to 0.64%, having briefly reached 0.96% in early June.
The US dollar went in the opposite direction, rising to 97,461 against a basket of currencies from a low of 95,714 earlier in the month.
It was slightly higher in the yen at 107.20 on Monday, but within the recent range of 106.06 at 107.63. The euro stood at $ 1.1240 after having found a solid support around $ 1.1167. [USD/]
It’s an important week for US data with the ISM manufacturing index on Wednesday and payrolls on Thursday, before the Independence Day holiday. Federal Reserve Chairman Jerome Powell will also testify Tuesday.
“The US economic data will reinforce that the economy is going through the worst of the recession in our opinion,” said CBA currency analyst Joseph Capurso.
“But a double-dip recession is possible if widespread restrictions are re-imposed, leading to a rise in the dollar.”
In the commodity markets, gold remained near its highest level since early 2012 at $ 1,771 an ounce. [GOL/]
Oil prices fell amid concerns that the pandemic would delay the reopening of some economies and thus hurt fuel demand. [O/R]
Brent crude futures fell 70 cents to $ 40.32 a barrel, while US crude lost 62 cents to $ 37.87.
Chart: Asian stock markets here