Inventories hit two-week low, oil slips on virus wave

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LONDON (Reuters) – Global stocks hit two-week lows and oil fell nearly 2% on Monday as the continued spread of the coronavirus dampened optimism in the global economy, prompting investors to turn take refuge in safe haven and gold bonds.

FILE PHOTO: A man in a protective mask, following the coronavirus disease epidemic (COVID-19), walks past a stock market chart outside a brokerage house in Tokyo, Japan, May 18, 2020. REUTERS / Kim Kyung-Hoon

European stocks opened slightly lower after Asian stocks ended deep in the red, catching up on Wall Street on Friday as some US states reconsidered their plans to reopen.

The global death toll from COVID-19 reached half a million people on Sunday, including a quarter in the United States, where cases have increased in a handful of southern and western states.

The MSCI global equity index was down 0.2%, reaching its lowest level since June 15, led by Japan Nikkei losing 2.2% and Chinese blue chips by 0.9%. Future E-Mini’s for the S&P 500 increased 0.1%.

“The market is caught in a real battle between optimism of recovery and news of growing cases in certain geographic areas such as the United States,” said John Woolfitt, director of operations at Atlantic Capital Markets.

“I think this battle will continue until the United States succeeds.”

Sovereign bonds benefited from the transition to security with yields on 10-year US bonds close to 0.64%, having briefly reached 0.96% in early June. On Monday, yields on German government bonds hung on their monthly lows.

The US dollar generally went in the opposite direction, reaching 97.334 against a basket of currencies, against a low of 95.714 at the start of the month.

He was less fortunate on Monday, returning to 107.18 yen, although he has remained well in the recent range of 106.06 to 107.63. The euro stood at $ 1.1245 after finding solid support around $ 1.1167.

“The financial markets remain extremely fragile, weighing in on worsening news on viruses and improving economic data,” said Marija Veitmane, senior strategist at State Street Global Markets.

This is an important week for the US data with the ISM manufacturing index on Wednesday and the payroll on Thursday, before Independence Day. Federal Reserve Chairman Jerome Powell will also testify on Tuesday.

“WE. The economic data will reinforce that the economy is going through the worst of the recession in our opinion, “said Joseph Capurso, CBA analyst.

“But a double-dip recession is possible if general restrictions are re-imposed, causing the dollar to soar. ”

In the commodities markets, gold remained at its highest level since the start of 2012 at $ 1,773 an ounce.

Oil prices have plummeted amid fears that the pandemic will slow the reopening of some economies and thereby jeopardize fuel demand.

Futures on Brent crude fell 69 cents to $ 40.33 a barrel, while US crude fell 62 cents to $ 37.87.

Chart: Asian stock markets here

Chart: Asia-Pacific ratings here

Report by Thyagaraju Adinarayan in London, additional report by Wayne Cole in Sydney

Our standards:Principles of the Thomson Reuters Trust.

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