GLOBAL MARKETS-Stocks, oil fall as second wave fears cloud recovery prospects

GLOBAL MARKETS-Stocks, oil fall as second wave fears cloud recovery prospects

Reuters  | Jun 15, 2020 14:40

GLOBAL MARKETS-Stocks, oil fall as second wave fears cloud recovery prospects

* Asian stock markets :

By Swati Pandey and Sumeet Chatterjee
SYDNEY/HONG KONG, June 15 (Reuters) - Asian shares and Wall
Street futures fell on Monday as growing fears of a second wave
of coronavirus infections revived economic worries, while
underwhelming data from China also weighed on investor
Monday's losses follow a strong global rally since late
March, fuelled by central bank and fiscal stimulus and optimism
as countries gradually lifted restrictions put in place to curb
the spread of the novel coronavirus.
However, concerns are now swirling about a second wave with
Beijing on Monday reporting its second consecutive day of record
numbers of COVID-19 cases, while new cases and hospitalisations
in record numbers swept through more U.S. states. The risk-off sentiment is also likely to weigh on global
markets, with e-Minis for the S&P 500 Esc1 extending losses in
Asia to be down 2.7% at 0633 GMT, from 1% earlier.
European markets were also set to open lower with pan-region
EuroSTOXX 50 futures STXEc1 and German DAX futures FDXc1
each dropping 2.5% and FTSE futures FFIc1 falling 2%.
"Any new outbreak will be looked at very, very cautiously by
investors. The market is putting into perspective that the
COVID-19 issue has not been resolved yet. It's a reality check,"
said James McGlew, analyst at stockbroker Argonaut.
McGlew expects a further correction "as markets quantify
what lies ahead of us."
Worldwide coronavirus cases have crossed 7.86 million with
430,501​ deaths, according to a Reuters tally. MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS was down 2.3%, extending its losses from 0.3%
earlier in the day, with Australian shares .AXJO off 2.2% and
South Korea .KS11 falling 4.8%.
Japan's Nikkei .N225 also extended losses to 3.5%. Chinese
shares joined the sell-off with the blue-chip CSI300 index
.CSI300 down nearly 1%.
"A more balanced assessment of economic risks and the
probable recovery profile is materialising, at least in the
short term. That makes it difficult to see the previous dynamism
of upward momentum in risk appetite returning immediately," ANZ
Research said in a report.
Economic data from China did little to revive risk
China's industrial output rose 4.4% in May from a year ago,
less than expected, while retail sales fell a
larger-than-expected 2.8% in a sign of weak domestic demand.
The Chinese yuan extended losses in offshore trade after the
data to be last at 7.0883 per dollar.
Some analysts were still hopeful of a revival in sentiment.
"We assume that any second wave is likely to be more
manageable than the first given earlier policy experience,"
analysts at Morgan Stanley wrote in a note.
"Policy easing will also help Asia (excluding Japan) get
back on its feet better."
The risk-sensitive currencies of Australia AUD=D3 hit
$0.6779, the lowest level since June 2, after breaking below
Friday's low of $0.6800.
Elsewhere, the safe haven Japanese yen rose on the greenback
to 107.17 yen JPY=EBS .
Analysts said further tests awaited global markets this week
– in particular whether re-opening hopes could still push
equities higher.
Federal Reserve Chairman Jerome Powell is also due to
testify before Congress where "he may try to spin a more
upbeat/hopeful outlook – but whether markets listen remains to
be seen," said Betashares chief economist David Bassanese.
Oil fell more than 3% on Monday, extending losses from last
week, on worries renewed outbreaks of the coronavirus could
weigh on the recovery of fuel demand.
Brent crude LCOc1 futures fell 3.5%, to $37.39 a barrel by
0612 GMT, while U.S. West Texas Intermediate crude CLc1
futures were down 4.9%, to $34.49 a barrel. O/R
Oil investors await OPEC+ committee meetings of experts
later this week who will advise the producer group and its
allies on output cuts. O/R <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Asia stock markets
Asia-Pacific valuations
(Editing by Sam Holmes)

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