* Stocks slide as coronavirus threat remains intense
* Dollar braces for U.S. manufacturing data
* Oil market slammed again by supply glut and weak demand
* Industrial metals hammered, bonds up on safety demand
* Hungarian forint at record lows by democracy worries
By Marc Jones
LONDON, April 1 (Reuters) - World markets fell on Wednesday
as the coronavirus threat ensured an ugly start to April and the
second quarter for equities and commodities.
Traders headed for the safety of government bonds, the
dollar USD/ and gold GOL/ as evidence continued to mount
that the virus was sending the global economy into a deep
recession. Tokyo's Nikkei .N225 slumped 4.5% after the worst plunge
in factory activity in almost a decade. The pan-European STOXX
600 .STOXX sank 2.7% .EU and Wall Street futures ESc1
dived 3% .N after a dire forecast of likely U.S. coronavirus
deaths. "President Trump warning about two dreadful weeks ahead and
100,000 - 240,000 deaths in the coming months is definitely
putting a negative tone on the market," said Societe Generale
strategist Kit Juckes. "It is pretty risk-off out there. It is
definitely a day of lower bonds yields, falling equity indexes
and tin hats."
Wall Street tumbled on Tuesday, capping the biggest
quarterly fall since 1987 for the Dow Jones and the steepest for
the S&P 500 since the financial crisis. The fact it all happened
in a month and from record highs made it feel all the more
brutal. U.S. economic activity is likely to be "very bad" and the
unemployment rate could rise above 10% because of efforts to
slow the spread of the coronavirus, Cleveland Federal Reserve
Bank President Loretta Mester told CNBC. L1N2BO2UT
There had been some glimmers of hope during Asian trading.
China's factory activity improved in March after plunging in
February. It just scraped into positive territory, beating
analysts' expectations.
Blue-chip Chinese stocks failed to hold their gains,
however, .SS though Australian shares .AXJO did bounce a
tidy 3.5% as a slowdown in new coronavirus cases there and
rising iron ore prices lifted the market.
But Europe's morning plunge meant MSCI's main gauge of world
stocks .MIWD00000PUS was down nearly 1% having slumped 22%
since the start of the year.
The number of coronavirus infections globally headed toward
800,000. In a positive development, Deutsche Bank analysts noted
the global growth in new cases was below 10% for two consecutive
days, having exceeded that rate for most of the past two weeks.
Health officials were not upbeat, however. A World Health
Organization official warned that even in the Asia-Pacific
region, the epidemic was "far from over." Deutsche had also
warned the world's six main advanced economies would shrink
between 4% and 9% this year.
APRIL FALLS
In currency markets, the dollar's safe-haven appeal saw it
continue to rise. USD= The yen JPY= held its ground, but the
euro EUR=EBS was back under $1.10 as key euro zone
manufacturing data sank to lowest since mid-2012, when the
currency union's debt crisis was raging. The pound fell to $1.2350 GBP= and plenty of
commodity-exposed currencies from the Australian dollar AUD=
to the Russian rouble RUB= saw as much 1% losses. EMRG/FRX
Markets in Eastern Europe were hit too, with Poland's zloty
down over 1% after grim data there and Hungary's forint tanking
2.5% as worries remained about open-ended powers granted to
Prime Minister Viktor Orban to fight the coronavirus. CEE/
"In my view, markets have still not fully priced in the
damage from the coronavirus, with some people still talking
about V-shaped recovery," said Masahiko Loo, portfolio manager
at Alliance Bernstein in Tokyo.
"The U.S. and Europe are hit by the first wave now, but as
you can see in Asia, there could be more waves from re-imported
cases. Human psychology also does not quickly recover either
after an experience like this."
Demand for the guaranteed income of government bonds pushed
the yield on the benchmark 10-year U.S. Treasury note
US10YT=RR down to 0.63%.
Italian bond yields also held steady as the benefit of
recent European Central Bank measures meant the country - which
has been one of those hit hardest by the coronavirus -
successfully sold 8.5 billion euros of debt. GVD/EUR
Commodity markets were much rougher. Brent crude LCOc1
fell nearly 6% at one point to as low as $24.80 per barrel as
the United States, Russia, and Saudi Arabia jostled over a
massive oversupply of oil. O/R
Crude oil benchmarks ended the first quarter with their
biggest losses in history. Both U.S. and Brent futures got
hammered throughout March by the pandemic and a Saudi-Russia
price war.
Global demand has been cut sharply by travel restrictions.
Forecasters at major merchants and banks see demand slumping by
20% to 30% in April, and for weak consumption to linger for
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Global currencies vs. dollar http://tmsnrt.rs/2egbfVh
MSCI All Country Wolrd Index Market Cap http://tmsnrt.rs/2EmTD6j
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