(Fixes typo in ninth graph)
By Julien Ponthus
LONDON, June 15 (Reuters) - Fears of a second wave of
COVID-19 infections sent jitters across global markets on
Monday, with stocks and oil under pressure, while investors
bought into safe havens such as government bonds.
Several districts of the Chinese capital of Beijing closed
schools and ordered people to be tested after an unexpected rise
in infections linked to the biggest wholesale food market in
Asia.
This latest development, added to rising infections and
hospitalisations in several U.S. states, has led investors to
reassess the chances of a swift V-shaped recovery. "I am convinced that if cases continue to rise again, market
participants will clearly re-evaluate market valuations and
their assumptions", said Stephane Ekolo, an equity strategist at
TFS Derivatives in London.
"Market are pricing a too-optimistic recovery, in my
opinion, and there could be a reality check coming rather sooner
than later."
After falling over 2.5% in early trading, the pan-European
STOXX 600 .STOXX limited its losses to 0.5% with most sectors
and regional markets trading in the red after heavy losses in
Asia.
Japan's Nikkei .N225 fell 3.5% and South Korean shares
.KS11 tumbled 4.8%.
Futures for the S&P 500 Esc1 pared some losses but were
still down 1.8%.
The retreats follow a global rally since late March, fuelled
by central bank and fiscal stimulus and optimism about countries
gradually lifting lockdowns.
A number of analysts, however, have warned about a possible
disconnect between anticipation of a dire global recession and
the optimism in stock markets, with the Nasdaq hitting record
highs even as U.S. unemployment has surged.
"The market was pricing in a V-shape recovery. This can't be
the case if there is indeed a second wave, the best scenario is
U-shaped", said Steven Leung, executive director for
institutional sales at Uob Kay Hian.
"There will be a bigger impact this time on all those stocks
tied to the expected economic recovery such as travel, hotels,
if we see a second wave."
Euro zone bond yields edged down as investors bought safer
assets such as government bonds.
Germany's 10-year bond yield was near a three-week lows at
-0.45%.
Brent crude LCOc1 futures fell 0.7%, to $38.47 a barrel.
U.S. West Texas Intermediate crude CLc1 futures were down 1.7%
at $35.65 a barrel.
Oil investors await OPEC+ committee meetings later this week
that will advise the producer group and its allies on output
cuts. O/R In currencies, the dollar index =USD rose to 97.20,
flirting with a 10-day high, while risk-sensitive currencies
such as the Norwegian and Swedish crowns suffered, trading
around two-weeks lows.
The euro EUR=EBS slipped 0.1% against the dollar to
$1.1249
Worldwide coronavirus cases have crossed 7.86 million with
430,501 deaths, according to a Reuters tally.
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Asia stock markets https://tmsnrt.rs/2zpUAr4
Asia-Pacific valuations https://tmsnrt.rs/2Dr2BQA
Asset performance vs outbreak https://tmsnrt.rs/2YF3T1T
Stocks and oil versus COVID-19 cases https://tmsnrt.rs/3cXWNdO
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