Stocks depleted by increased coronaviruses, sadness of recession

LONDON / SINGAPORE (Reuters) – Global stocks plummeted to their lowest level in more than a week on Thursday, due to an increase in US coronavirus cases. USA And an IMF warning of a nearly 5% drop in the world economy this year again.

Asia had suffered its biggest drop in eight overnight sessions, and Europe’s STOXX 600 fell nearly 1% to add to the 3% cut it had suffered the day before, albeit after a few months of red hot.

Nerves were building again on the impact of COVID-19.

In the United States, Florida, Oklahoma and South Carolina reported record increases in new cases on Wednesday. Seven other states had record levels earlier this week and Australia posted its biggest daily increase in infections 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.

Wall Street S&P 500 futures had also yielded below a key technical level known as the 200-day moving average, leaving investors nestled in traditionally government-backed gold and government bonds.

The International Monetary Fund said on Wednesday it now expects an even deeper global recession, with output likely to decline 4.9% this year instead of the 3% contraction it had 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 particular drop that has broken the camel’s back, but people are a little nervous: there are many reasons to be very cautious.”

In the currency markets, the dollar held on to the big gains that had lifted it from almost a two-week low.

Yields on 10-year US Treasury bonds fell to a 10-day low of 0.6692%, and those of the German Bunds, Europe’s benchmark safe asset, fell to -0.453%, although they remained within a recent range. very worn.

HAND BRAKE

Anxiety is likely to continue to rise before US data. USA, including unemployment claims figures at 1230 GMT and new coronavirus numbers.

“Any improvement in the jobs could be offset if there is another recovery in case load in the United States,” said Kyle Rodda, market analyst at IG brokerage in Melbourne. “It is a potential handbrake in the growth rebound story.”

Bank of England chief economist Andy Haldane is due to speak about the future of the society at 1700 GMT. Haldane argued against last week’s increase to the bank’s bond purchase program. The pound rose for the third day in four before that.

Signs on the trade front and political uncertainty have also baffled investors.

The United States has added items valued at $ 3.1 billion to a list of eligible European products to be affected by import tariffs.

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 has stalled a rebound in riskier currencies, pushing the Australian dollar below 69 cents and the kiwi stuck at 64 cents.

Gold rose to $ 1,764 an ounce [GOL/]While Brent crude fell below $ 40 a barrel and US crude futures fell 26 cents a barrel or 0.7% to $ 37.75.