GLOBAL MARKETS-Asia stocks retreat as virus threatens economic reopening

GLOBAL MARKETS-Asia stocks retreat as virus threatens economic reopening

Reuters  | Jun 29, 2020 13:20

GLOBAL MARKETS-Asia stocks retreat as virus threatens economic reopening

* Asian stock markets :
* Asia ex-Japan skids from 4-mth top, S&P 500 futures dip
* Deaths from COVID-19 reached half a million on Sunday
* Bonds supported on safe haven appeal, oil slips

By Wayne Cole
SYDNEY, June 29 (Reuters) - Asian share markets began the
week with a cautious tone on Monday as the relentless spread of
the coronavirus finally made investors question their optimism
on the global economy, benefiting safe harbour bonds and
crimping oil prices.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS fell 1.3% and further away from a four-month top
hit last week. Japan's Nikkei .N225 shed 2.2% and Chinese blue
chips .CSI300 0.9%.
E-Mini futures for the S&P 500 ESc1 eased 0.2%, while
EUROSTOXX 50 futures STXEc1 lost 0.7%. FTSE futures FFIc1
Wall Street had faltered on Friday as some U.S. states
reconsidered their reopening plans. The global death toll from
COVID-19 reached half a million people on Sunday, according to a
Reuters tally. About one-quarter of all the deaths so far have been in the
United States, with cases surging in a handful of southern and
western states that reopened earlier.
"The increase in U.S. COVID-19 infection rates has dented
momentum across markets despite the improvements in the global
economy, which continues to beat most data expectations," wrote
analysts at JPMorgan in a note.
"Our strategists remain sanguine and recommend to buy on
dips but also selectivity," they added. "Traditional hedges like
JPY vs USD, USD vs EM FX, gold and quality stocks are still
outperforming this month. We stay overweight U.S. equities but
move EM equities to neutral and stay neutral U.S. credit."
Sovereign bonds benefited from the shift to safety with
yields on U.S. 10-year notes US10YT=RR falling to 0.64%,
having briefly been as high as 0.96% early in June.
The U.S. dollar has generally gone in the opposite
direction, rising to 97.461 against a basket of currencies
=USD from a trough of 95.714 earlier in the month.
It had less luck on Monday easing back to 107.08 yen JPY= ,
though it remained well within the recent range of 106.06 to
107.63. The euro stood at $1.1240 EUR= having found solid
support around $1.1167. USD/
It is an important week for U.S. data with the ISM
manufacturing index on Wednesday and payrolls on Thursday, ahead
of the Independence Day holiday. Federal Reserve Chair Jerome
Powell is also testifying on Tuesday.
"U.S. economic data will reinforce that the economy is
through the worst of the recession in our view," said CBA
currency analyst Joseph Capurso.
"But a double-dip recession is possible if widespread
restrictions are reimposed, leading to a surge in the dollar."
In commodity markets, gold held near its highest since early
2012 at $1,773 an ounce XAU= . GOL/
Oil prices slipped amid concerns the pandemic would slow the
reopening of some economies and thus hurt demand for fuel. O/R
Brent crude LCOc1 futures fell 83 cents to $40.19 a
barrel, while U.S. crude CLc1 lost 84 cents to $37.65.

Asia stock markets
Asia-Pacific valuations
(Editing by Sam Holmes)

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