World shares have paused as investors turned cautious after a 42 per cent surge since March as economies continued to struggle with the effects of the coronavirus pandemic.
Europe’s blue-chip stock index opened 0.5 per cent lower on Monday after its best weekly gain in more than eight years. The index was dragged down by healthcare and tech stocks, which were resilient throughout the coronavirus crisis.
US S&P 500 futures inched 0.1 per cent lower, giving up most of the gains made earlier in the day. Asia shares rose in a catch-up rally following Friday’s US jobs data, which showed a surprising recovery, raising hopes of a quicker global economic revival from the coronavirus pandemic.
Gains in Asia were capped as a Chinese trade data published on Sunday showed exports contracted in May as global lockdowns continued to weaken demand. A bigger-than-expected fall in imports pointed to mounting pressure on manufacturers as world growth stalled.
The MSCI all-country world stocks index, which covers 49 markets around the world, is now seven per cent away from a record high. Wall Street’s fear gauge remained pinned below 30 points in June on encouraging economic data and central bank stimulus.
The US Labor Department’s closely watched employment report showed an unexpected drop in the jobless rate to 13.3 per cent last month from 14.7 per cent in April, a post-World War II high.
The data raised hopes of a quick economic recovery as governments worldwide ease social curbs aimed at stemming the virus.
The jobs data also pushed up US bond yields, with the 10-year Treasuries yield rising as high as 0.959 per cent on Friday, a level not seen since mid-March. It last stood at 0.929 per cent.
The gains in US bond yields over the past couple of days put more focus on the US Federal Reserve, which will hold a two-day policy meeting ending on Wednesday.
Fed chair Jerome Powell has said the US economy could feel the weight of the economic shutdown for more than a year.
Hopes of a quick recovery in the US could be quashed by mounting wave of protests demanding police reform after the killing of a black man in Minneapolis.
In Europe, yields on top-rated German government bonds dipped but remained near the more than two-month highs hit last week after the European Central Bank expanded its emergency stimulus scheme.
Brent crude climbed 1.5 per cent to $US42.93 per barrel. US West Texas Intermediate crude rose 1.3 per cent to $US40.08 a barrel.
The broad improvement in sentiment weighed on the safe-haven Japanese yen, which stood at 109.5 to the dollar, near Friday’s 10-week low of 109.85.
The euro changed hands at $US1.1303, after touching a three-month high of $US1.1384 on Friday.