GLOBAL MARKETS-Global equities markets waver, bonds dip on fears of second wave of infections

(Updates through close of U.S. trading)
By David Randall
NEW YORK, May 11 (Reuters) - Global equities wavered on
Monday as investors weighed a jump in coronavirus cases in South
Korea and Germany against signs that more parts of the U.S.
economy could soon emerge from economic lockdown. Safe havens
such as U.S. Treasuries edged higher in anticipation of further
stimulus measures to limit the damage of the COVID-19 pandemic.
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.
Yet investors were also bolstered by factory work resuming
in states such as Michigan, restoring thousands of jobs lost
over the last six weeks of the economic freeze-up. MSCI's gauge of stocks across the globe .MIWD00000PUS shed
0.04% following broad declines in Europe and slight gains in
Asia.
On Wall Street, the Dow Jones Industrial Average .DJI fell
109.33 points, or 0.45%, to 24,221.99, the S&P 500 .SPX gained
0.39 points, or 0.01%, to 2,930.19 and the Nasdaq Composite
.IXIC added 71.02 points, or 0.78%, to 9,192.34.
The Nasdaq is now within 10% of its all-time high reached in
February.
Increasing trade tensions between the United States and
China will 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 11/32 in price
to yield 0.7147%, 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 0.08% to $24.72 per barrel
and Brent LCOc1 was at $30.09, down 2.84% on the day.

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