SYDNEY- Asian share markets began the week with a cautious tone on Monday as the relentless spread of the coronavirus finally made investors question their optimism on the global economy, benefiting safe harbor bonds and crimping oil prices.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.3 percent and further away from a four-month top hit last week. Japan’s Nikkei shed 2.2 percent and Chinese blue chips 0.9 percent.
E-Mini futures for the S&P 500 eased 0.2 percent, while EUROSTOXX 50 futures lost 0.7 percent. FTSE futures 0.9 percent.
Wall Street had faltered on Friday as some US states reconsidered their reopening plans. The global death toll from COVID-19 reached half a million people on Sunday, according to a Reuters tally.
About one-quarter of all the deaths so far have been in the United States, with cases surging in a handful of southern and western states that reopened earlier.
“The increase in US COVID-19 infection rates has dented momentum across markets despite the improvements in the global economy, which continues to beat most data expectations,” wrote analysts at JPMorgan in a note.
“Our strategists remain sanguine and recommend to buy on dips but also selectivity,” they added. “Traditional hedges like JPY vs USD, USD vs EM FX, gold and quality stocks are still outperforming this month. We stay overweight US equities but move EM equities to neutral and stay neutral US credit.”
Sovereign bonds benefited from the shift to safety with yields on US 10-year notes falling to 0.64 percent, having briefly been as high as 0.96 percent early in June.
The US dollar has generally gone in the opposite direction, rising to 97.461 against a basket of currencies from a trough of 95.714 earlier in the month.– Reuters