Stock market today: Dow in fresh record close as Powell signals rate cut incoming
* Equities slump on resurgence of coronavirus infections
* Oil futures extend sell-off on demand worries
* Yuan slips against dollar as coronavirus rattles Asian FX
By Stanley White
TOKYO June 12 (Reuters) - Asian shares fell sharply on
Friday and oil prices extended losses on growing concerns that a
resurgence of coronavirus infections could stunt the pace of
recovery in economies reopening from lockdowns, or even lead to
fresh restrictions.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS slid 1.52%, after a strong run-up in recent
weeks. Australian stocks .AXJO dropped 1.89%, while shares in
China .CSI300 fell 0.45%.
U.S. stock futures, the S&P 500 e-minis ESc1 , rose 1.2% in
Asian time on Friday after tumbling overnight, but that did
little to help sentiment.
Oil futures slumped for a second consecutive trading session
due to worries about weak global energy demand, which weighed on
commodity currencies and boosted the safe-haven dollar.
The Chinese yuan headed for its biggest daily decline in two
weeks, underscoring investors' risk-averse mood in Asia.
The U.S. Treasury yield curve flattened, which suggests that
a heightened sense of dread about the economic outlook is
returning to financial markets.
"Fear has a nasty habit of feeding on itself," analysts at
Mizuho Securities wrote in a research note.
"So it is not hard to project a 'second bear wave' in
markets from a 'second wave' of infections; as economies
re-open, especially in markets that have rebounded... in
defiance of all the uncertainties that the world is beset with."
The three major U.S. stock indexes fell more than 5% on
Thursday, posting their worst day since mid-March, when markets
were sent into freefall by the abrupt economic lockdowns put in
place to contain the pandemic.
Japan's Nikkei stock index .N225 slid 0.82%, and shares in
South Korea .KS11 fell 2.31% as some investors booked profits
from the recent rally in global equities, which saw riskier
assets rally even as the number of global virus cases and deaths
continued to rise. Coronavirus cases have jumped in several U.S. states in
recent days, raising concern among experts who say authorities
have loosened anti-virus restrictions too early.
Cases in New Mexico, Utah and Arizona rose by 40% for the
week ended Sunday, a Reuters tally shows. Florida and Arkansas
are other hot spots. The U.S. Federal Reserve released a gloomy economic outlook
at the end of its two-day monetary policy meeting on Wednesday.
Chairman Jerome Powell warned of a "long road" to recovery.
Powell also said central bankers discussed yield curve
control, which is a policy used in Japan and Australia to anchor
part of the yield curve at very low level to support the
economy. "For (financial markets to outperform), we need the Fed to
move further, especially along on its decision on implementing
yield-curve control," Jean-Louis Nakamura, Asia Pacific chief
investment officer at Lombard Odier said in a memo.
"The longer the Fed waits, the higher the risk of the return
of short term volatility on markets."
The spread between two- and 10-year Treasury yields
US2US10=TWEB has narrowed to 49 basis points from a
three-month high of 72 basis points reached last week as
investors scale back their bets that the U.S. economy will
improve.
U.S. crude CLc1 slid 1.49% to $35.80 a barrel, while Brent
crude LCOc1 eased 1.19% to $38.09 per on Friday, hit by
renewed concerns over demand and a large buildup of U.S. crude
inventories. O/R
Commodity-linked currencies, the Australian AUD=D3 and New
Zealand dollars NZD=D3 , snapped a three-week run of sharp
gains.
In the onshore market, the yuan CNY=CFXS fell 0.3%, headed
for its biggest daily decline since May 27.
The dollar also rose against the yen JPY=EBS and the
British pound GBP=D3 .
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Global assets http://tmsnrt.rs/2jvdmXl
Global currencies vs. dollar http://tmsnrt.rs/2egbfVh
Emerging markets http://tmsnrt.rs/2ihRugV
MSCI All Country Wolrd Index Market Cap http://tmsnrt.rs/2EmTD6j
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(Editing by Neil Fullick, Jacqueline Wong and Kim Coghill)