Asian shares, US stock futures and oil prices slipped on Thursday as surging US coronavirus cases, global trade tensions and an International Monetary Fund downgrade to economic projections dented confidence in a recovery.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.7 percent, Tokyo’s Nikkei share index slumped 1.4 percent, and Australia’s ASX 200 tumbled 1.8 percent. US stock futures also declined 0.7 percent following on from an overnight slide on Wall Street.
Markets in Hong Kong and mainland China were closed for public holidays on Thursday.
Florida, Oklahoma and South Carolina reported record increases in new coronavirus cases on Wednesday. Seven other states had record highs earlier in the week, and Australia posted its biggest daily rise in infections in two months.
The governors of New York, New Jersey and Connecticut ordered travellers from nine other states to quarantine on arrival, a worry for investors who had mostly been expecting an end to pandemic restrictions.
Texas is also facing a “massive outbreak” and authorities are considering localised restrictions, Governor Greg Abbott said in a television interview.
Market sentiment is rapidly turning more negative on concern that the spreading coronavirus could force policymakers to slow the pace or reverse business re-openings.
“We’ve had such a great run from the end of March it’s only inevitable that we should get at least a little step back on the way to higher prices over the course of the year,” Margie Patel, portfolio manager at Wells Fargo Asset Management, told Bloomberg.
Australian airline Qantas said on Thursday it does not expect sizeable international operations until at least July 2021, as the carrier announced plans to sack a fifth of its workforce and raise $1.3bn to stay afloat.
The IMF said it now expects a deeper global recession, with output to shrink 4.9 percent this year, much sharper than the 3.0 percent contraction predicted in April.
“There is a little bit of ‘reality bites’ coming,” said Damian Rooney, senior instructional salesman at stockbroker Argonaut in Perth.
“I don’t think there was a particular straw that broke the camel’s back, but people are a little bit twitchy – there are a lot of reasons to be pretty cautious.”
Oil prices, a proxy for global energy consumption and economic growth, nursed losses following a 5-percent tumble overnight as US crude storage hit another record and worries of faltering consumer demand resurfaced.
US and Brent crude oil futures were both down two-thirds of 1 percent in late Asian trade.
“A second viral wave might weaken the energy demand outlook, and derail oil price’s trajectory towards a recovery. Market participants are attempting to price in that possibility pre-emptively,” Margaret Yang, strategist at trading firm DailyFX, said in a research note sent to Al Jazeera.
The dollar clung on to broad overnight gains which had lifted it from near a two-week low.
The yield on benchmark 10-year US Treasuries fell to a one-week low of 0.6724 percent.
Worries were even more pronounced on Wall Street overnight, and pulled major indexes back to flat for the month.
The S&P 500 fell 2.6 percent overnight, and the Nasdaq Composite snapped eight sessions of gains and slipped 2.2 percent.
The Dow Jones Industrial Average tumbled 2.72 percent with retail-investor darlings in the travel sector hammered.
Anxiety in markets is likely to remain heightened ahead of US jobless claims data due at 12:30 GMT, along with virus case figures, and confidence could be dented by disappointment on either count.
“Any improvement in jobs might be counteracted if there is another pickup in the case load in the United States,” said Kyle Rodda, market analyst at brokerage IG in Melbourne.
“It’s a potential handbrake on the growth rebound story.”
On top of virus concerns, worrying signals on the trade front have unnerved investors.
The US has added items valued at $3.1bn to a list of European goods eligible to be hit with import duties, as it seeks to keep the pressure on in a long-running dispute over aircraft subsidies.
“The US COVID-19 new case numbers that largely accounted for this change of view remain horrible … That, together with a worse trade outlook (following US tariffs on European goods, including gin!) might be enough to cement the recent risk re-think,” Robert Carnell, Asia-Pacific head of research at Dutch bank ING, said in a research note sent to Al Jazeera.
The Trump administration has also determined that Chinese firms, including Huawei and video surveillance company Hikvision are owned or controlled by the Chinese military, laying the groundwork for sanctions and fresh China-US tension.
That has stalled a rally in riskier currencies, and dropped the Australian dollar under 69 cents to $0.6864, and had the New Zealand dollar stalled around 64 cents.
Gold steadied at $1,764.07 an ounce.