Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Stocks stumble on fears of second wave of coronavirus cases

Stock MarketsMay 11, 2020 06:55
Saved. See Saved Items.
This article has already been saved in your Saved Items
2/2 © Reuters. FILE PHOTO: Pedestrians wearing face masks walk near an overpass with an electronic board showing stock information in Shanghai 2/2

By Tommy Wilkes

LONDON (Reuters) - Stock markets gave up their early gains on Monday after reports of a pick-up in new coronavirus cases that threatens to slow or reverse the loosening of lockdown measures.

Shares had initially gained, led by Asia, where markets cheered further loosening of coronavirus restrictions in the region - New Zealand will ease some curbs from Thursday, and Japan plans to end a state of emergency for areas where infections have stabilised.

In Europe, millions in France are set to cautiously emerge from one of the region's strictest lockdowns, while Britain laid out its own gradual path out of lockdown.

But South Korea warned of a second wave of the new coronavirus as infections rebounded to a one-month high, while new infections accelerated in Germany, which has been easing its own lockdown.

Investors have tried to stay optimistic in recent weeks, opening up a gap between dire economic conditions on the ground and a stock market rebounding because of huge stimulus programmes as well as on the timing and speed of any recovery.

A spike in new cases in countries that have already begun to relax restrictions on commerce, however, jolted market confidence badly.

"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 were dashed.

"The next two or three weeks are going to be pivotal," he said, as evidence of how businesses and consumers were responding to the loosening of lockdown measures.

By 1005 GMT, the Euro STOXX 600 was down 0.47%. Germany's DAX was 0.34% lower and Britain's FTSE 100 0.33% in the red. Energy and travel stock were among the hardest hit.

E-Mini futures for the S&P 500 dropped 0.38%.

World shares, measured by the MSCI world equity index which tracks shares in 49 countries, reversed earlier gains and were flat on the day. The index has risen 16% from its March lows.

For a graphic on The MSCI world equity index, click

As investors look to the reopening of economies, most have ignored dismal economic data. The most recent was Friday's U.S. jobs report, which showed the biggest jump in unemployment since the Great Depression.

But the numbers were not as bad as economists had expected, and analysts say that markets have already priced in the huge hit to growth and employment. Record monetary and fiscal stimulus has fired up the rebound in asset prices.

"Risk bears are being sent into hibernation," said Kit Juckes, a markets strategist at Societe Generale (PA:SOGN). "Markets focus on re-opening economies and policy activism, bears struggle to understand how they can ignore re-infection and economic destruction."

The bond market seems to think any economic recovery will be slow. Two-year U.S. government bond yields hit record lows at 0.105% and Fed fund futures turned negative for the first time ever. [US/]

The rally in U.S. bond prices has come even as the U.S. Treasury plans to borrow trillions of dollars in the next few months to plug a gaping budget deficit.

The decline in U.S. yields might have been a burden for the dollar, but with rates everywhere near to or less than zero, major currencies have been stuck in tight ranges.

On Monday, the dollar was up 0.2% against a basket of currencies but made more headway against the safe-haven Japanese yen, rising 0.5% to 107.23.

The euro dropped 0.2% to $1.0827 while sterling lost 0.4% to $1.2367.

In commodity markets, oil prices fell as a glut weighed on prices and the pandemic eroded global demand. [O/R]

Brent crude fell $1.11, or 3.6%, at $29.86 a barrel. U.S. West Texas Intermediate crude fell 92 cents, or 3.7%, to $23.82.

The spot gold price climbed back to $1,700 an ounce. Buoyed by its safe-haven appeal, gold has rallied more than 12% so far in 2020, hitting seven-and-a-half year highs.

Stocks stumble on fears of second wave of coronavirus cases

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email