Global stocks drop as US coronavirus cases surge

Global stocks fell on Thursday as rising US coronavirus cases stoked fears that a resurgence of the pandemic could derail an economic recovery.

In morning trading in Asia-Pacific, Japan’s Topix index fell 1.3 per cent while Australia’s S&P/ASX 200 and South Korea’s Kospi each dropped 1.9 per cent. Markets in Hong Kong and China were closed for a public holiday.

Overnight, Wall Street’s S&P 500 finished 2.6 per cent lower in its worst one-day performance in two weeks after the governors of New York, New Jersey and Connecticut announced that travellers coming in from states with high infection rates must quarantine for 14 days.

Those states include Texas, Florida and California, which all reported record increases on Wednesday. They were also among the quickest to reopen their economies last month, which prompted public health experts to warn that many jurisdictions were moving too quickly.

Traders are keeping close tabs on the latest coronavirus figures as the global case count tally rises above 9m infections and 450,000 deaths.

In addition to the virus, trade tensions are also coming to the fore. Washington on Wednesday launched a consultation on new tariffs on $3.1bn of European products in a move that would broaden a transatlantic dispute over aircraft subsidies.

Futures tipped Wall Street’s S&P 500 to drop another 0.5 per cent when trading begins later in the day. The FTSE 100 was set to shed 0.4 per cent following a 3.1 per cent drop on Wednesday.

Oil prices edged down in Asian trading after a larger than expected increase in crude oil inventories sent benchmarks about 6 per cent lower on Wednesday. Brent crude, the international marker, was down 0.3 per cent at $40.21 a barrel while West Texas Intermediate, the US benchmark, fell 0.1 per cent to $37.96.

“A surge in Covid-19 cases in the US is certainly not helping sentiment, with worries over what this could mean for demand if this trend continues, while trade developments have not been helpful either,” said Warren Patterson, head of commodities strategy at ING.

The yield on US 10-year Treasuries, viewed by investors as a haven during times of uncertainty, fell 0.01 percentage point to 0.668 per cent. Bond prices rise as yields fall.

Gold, another haven, was steady at a near eight-year high of $1,763 per troy ounce. The metal has advanced more than 20 per cent since March.