A slump in global shares has extended to its fourth day running and oil has tumbled over growing concerns a resurgence of coronavirus infections could stunt the pace of recovery from lockdowns.
MSCI’s 49-country index of world stocks on Friday slipped 0.5 per cent to an 11-day low, while MSCI’s broadest index of Asia-Pacific shares outside Japan sank 1.3 per cent.
In Europe, the STOXX 600 Index swung between gains and losses after opening and was last down 0.6 per cent, extending a run of losses to five days in a row.
Oil futures slumped for a second consecutive trading session due to worries about weak global energy demand, which weighed on the currencies of oil producers and countries that rely on exporting commodities.
The Chinese yuan headed for its biggest daily decline in two weeks, underscoring investors’ risk-averse mood in Asia.
That was after the three major US stock indices posted their worst day on Thursday since mid-March, when markets were sent into freefall by the abrupt economic lockdowns put in place to contain the pandemic.
Angst about a second wave of infections in several US states and increased uncertainty about US President Donald Trump’s re-election prospects were partly to blame, said Eli Lee, head of investment strategy, Bank of Singapore.
There was also a feelling that the global stock market rally was running ahead of fundamentals.
“It seems unlikely in our view that the equity market could revisit the levels of the March bottom, which were reflecting far greater levels of uncertainties,” he said.
“That includes the real risk of a greater financial blow-up stemming from the tremendous liquidity pressures at that time, which is now mostly diminished.”
US stock futures, the S&P 500 e-minis, rose 1.0 per cent but that did little to help sentiment.
COVID-19 cases in New Mexico, Utah and Arizona rose by 40 per cent for the week ended Sunday, a Reuters tally shows. Florida and Arkansas are other hot spots.
The jump in cases has raised concern among experts who say authorities have moved too soon to loosen restrictions put in place to contain the spread.
The US Federal Reserve released a gloomy economic outlook at the end of its two-day monetary policy meeting on Wednesday. Chairman Jerome Powell warned of a “long road” to recovery.
Economic data appeared to back up the Fed’s projections, with jobless claims still more than double their peak during the Great Recession and continuing claims at an astoundingly high 20.9 million.
US crude slid 2.7 per cent to $US35.35 a barrel, while Brent crude eased 2.49 per cent to $US37.59 per barrel, hit by renewed concerns over demand and a large buildup of US crude inventories.
The euro rose 0.1 per cent to $US1.1315, staying close to $US1.1422, the three-month high it reached on Wednesday.
The Aussie dollar rose 0.4 per cent to 0.6881, after falling to a 10-day low of 0.6799 in the Asian session.
The Norwegian crown advanced the most, rising by 0.6 per cent to 9.5665 against the US currency.
In the onshore market, the yuan fell 0.3 per cent, headed for its biggest daily decline since May 27.
The 10-year US Treasury yield edged up slightly to 0.6853 per cent on Friday.
Bond prices were well supported after they rallied following the Fed’s commitment on Wednesday to years of extraordinary support to counter the economic fallout from the pandemic.