Virus Fears Darken Recovery Outlook, Subdue World Markets

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Rising virus infections caused some governments to backtrack on pandemic reopenings, or to warn they might have to, subduing world markets, The Associated Press reported.

At the same time, investors have been counting on businesses continuing to reopen, helping to drive a recovery from the worst global downturn since the 1930s Great Depression.

However, the slim progress has been halting – Wall Street saw a selloff Friday after Texas and Florida reversed course and clamped down on bars again in the nation’s biggest retreat yet. New coronavirus waves has surged back in many places, especially the American South and West.

Asian markets extended that decline, and shares were up slightly on Monday in Europe after a measure of economic sentiment increased. Germany’s DAX edged 0.3% higher to 12,130 and the CAC 40 in Paris rose 0.1% to 4,916. Britain’s FTSE rose less than 0.4% to 6,183, AP noted.

U.S. futures were up slightly, with the future for the S&P 500 0.2% higher and that for the Dow industrials up 0.4%.

Concerns have deepened as the number of confirmed cases topped 10 million, with more than 500,000 reported dead from COVID-19, according to a tally by Johns Hopkins University. Such data is thought to understate the problem due to issues with testing and a large number of asymptomatic cases, AP adds.

Even as virus outbreaks flare, economic data is still suggesting a recovery, which might be a fragile one.

“Conflicting signals between the COVID-19 spread and economic data continue to keep risk sentiment, and consequently markets, in a gridlock going into the end of June,” said Jingyi Pan of IG. “As far as the weekend leads are concerned, however, the topping of the 10 million mark for global COVID-19 cases had tipped the scale in the direction of risk-off for markets going into Monday.”

China reported that profits of major industrial companies rose 6% in May from a year earlier as demand recovered and costs remained relatively low. That was up from a 4.3% drop in April, according to the AP.

China’s oil refiners and other heavy industries have profited from falling prices for crude and other commodities as global demand has waned amid the pandemic. But profits fell more than 19% in January-May, the National Bureau of Statistics reported.

The number of confirmed new coronavirus cases per day in the U.S. has surpassed 40,000 for three straight days, according to the Johns Hopkins tally. This eclipses the mark set during the deadliest stretch in late April, AP adds.

Deaths and hospitalizations have been rising in parts of the country, especially in the South and West, as the stock market is likely to remain volatile as traders weigh such ups and downs in the trajectory of the pandemic.

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