(Updates to midday U.S. trading)
By David Randall
NEW YORK, May 11 (Reuters) - A jump in coronavirus cases in
South Korea and Germany rattled investors and sent global
equities markets lower on Monday, while safe-haven assets,
including the dollar and U.S. Treasuries, edged higher.
The accelerating infection rates come as countries ranging
from Japan to France are set to emerge from lockdowns that have
frozen the global economy.
A second wave of infections would likely snuff out the rally
in equity markets as investors position for a severe and
prolonged global recession.
"If we do have a second wave and lockdowns, that's almost
the worst outcome from an economic perspective," said Guy
Miller, chief market strategist at Zurich Insurance Company.
Miller said that would "postpone business investment
indefinitely" and see consumers retrench as hopes for a quick
economic recovery are dashed.
He said the next two or three weeks would be "pivotal" in
demonstrating how businesses and consumers respond to the
loosening of lockdown measures.
MSCI's gauge of stocks across the globe .MIWD00000PUS shed
0.20% following broad declines in Europe and slight gains in
Asia.
In midday trading on Wall Street, the Dow Jones Industrial
Average .DJI fell 146.68 points, or 0.6%, to 24,184.64, the
S&P 500 .SPX lost 6.41 points, or 0.22%, to 2,923.39 and the
Nasdaq Composite .IXIC added 39.32 points, or 0.43%, to
9,160.64.
Increasing trade tensions between the United States and
China will also likely weigh on investor sentiment given the
outsized rally that has pushed the benchmark S&P 500 up nearly
30% since its March lows, said Frédérique Carrier, head of
investment strategy at RBC Wealth Management.
"We think it is unlikely the Trump administration would
willingly unleash a new trade war that would crimp an economic
recovery, but the possibility of missteps remains," she said.
Bond markets signaled that a global economic recovery will
be slow. Two-year U.S. government bond yields US2YT=RR have
hit record lows at 0.105% and Fed fund futures 0#FF: last week
turned negative for the first time ever. US/
Benchmark 10-year notes US10YT=RR last fell 1/32 in price
to yield 0.6844%, from 0.681% late on Friday.
"Markets focus on reopening economies and policy activism,
while bears struggle to understand how they can ignore
reinfection and economic destruction," said Kit Juckes, a
markets strategist at Societe Generale.
In commodity markets, oil prices slid as the pandemic eroded
global demand. O/R
U.S. crude CLc1 recently fell 1.09% to $24.47 per barrel
and Brent LCOc1 was at $29.98, down 3.2% on the day.
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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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