* Increase in US viruses, New restrictions considered
* Europe stabilizes after early decline, Japan -1.2%, Australia -2.5%
* US stock futures fell 0.5% after falling as low as 1.2%
* Stronger dollar in the currency markets
* Brent drops less than $ 40 a barrel
* *
By Marc Jones
LONDON, June 25 (Reuters) – Global stocks plummeted to their lowest level in more than a week on Thursday, due to an increase in US coronavirus cases.
Asia suffered its biggest drop in eight sessions overnight, and although Europe’s STOXX 600 recovered from an initial 1% drop, it remained unstable, while Wall Street was expected to open 0.5% in the red.
After a few red-hot months for markets that have seen a global share rebound of nearly 40%, nervousness over the impact of COVID-19 was on the rise again.
In the United States, Florida, Oklahoma and South Carolina reported record increases in new cases on Wednesday, and Australia posted its biggest daily increase in two months.
The governors of New York, New Jersey and Connecticut ordered travelers from eight other states to quarantine on arrival, a concern for investors who were mostly awaiting the end of pandemic restrictions.
Disney has delayed the reopening of California theme parks and resorts, and Texas is facing a “massive outbreak” and is considering new localized restrictions, its governor said.
“During the rapid rebound from the March lows, equity markets may have gotten a little ahead,” equity manager DWS said in a quarterly report from the Chief Investment Officer.
With the added pressure of impending mid-year portfolio reviews, investors huddled on traditionally safer government bonds and gold.
The International Monetary Fund said on Wednesday it now expects world output to drop 4.9% this year instead of the 3% it forecast in April.
“There is a bit of a reality bite,” said Damian Rooney, a senior institutional salesman for brokerage Argonaut in Perth. “I don’t think there is a drop that filled the glass, but people are a little nervous.”
However, UBS chief economist Paul Donovan said international organizations tend to lag behind and that many economists are now revising forecasts upward, not downward.
“The IMF has been too pessimistic about growth in 27 of the past 30 years. It tends to be significantly too pessimistic when there are major structural changes. ”
For now, the moderate mood helped the dollar take advantage of the broad gains in the currency markets that had raised it from nearly a two-week low.
Yields on the 10-year US Treasury bond and the German Bunds fell to 10-day lows of 0.66% and -0.47%, although they remained within their recent ranges.
Layoffs
Weekly unemployment claim data showed weak demand is forcing American employers to lay off workers, even as companies reopen. Claims totaled 1.48 billion seasonally adjusted for the week ending June 20, and while they were down from 1.54 billion the previous week, they were higher than the 1.3 million a Reuters poll had expected.
Bank of England chief economist Andy Haldane, who argued against raising the bank’s bond purchase program last week, is due to speak about the future of the company at 1700 GMT. The pound rose for the third day in four before that.
Signals on the trade front and political uncertainty have also raised concerns.
The United States has added items valued at $ 3.1 billion to a list of eligible European products to be affected by import tariffs.
Meanwhile, the Trump administration has determined that Huawei and China’s video surveillance company Hikvision are owned or controlled by the Chinese military, laying the groundwork for sanctions and new Sino-US tension.
That stopped a rally in the riskier currencies, and pushed the Australian dollar below 69 cents and left the kiwi stuck around 64 cents.
Gold hovered around $ 1,757 an ounce, while Brent crude fell to less than $ 40 a barrel and US crude futures fell 60 cents a barrel or 1.6% to $ 37.40.
Additional reports from Tom Westbrook in Singapore; Editing by Kirsten Donovan
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