Markets subdued as investors eye risk of economies reopening

Global stock markets were subdued on Wednesday as investors worried about the risks of reopening economies from coronavirus shutdowns too soon.

Stocks retreated in London, Tokyo and Paris, but reversed early losses in Shanghai. Wall Street futures pointed to small gains on the open in the United States.

India's Sensex jumped more than 2% after the government announced it would spend more than $260 billion more to help the economy weather the pandemic.

Underscoring concerns about the risks of ending shutdowns before the coronavirus pandemic is brought under control, the top US infectious diseases expert, Dr Anthony Fauci, told Congress on Tuesday that if the country reopens too soon, it could not only cause some suffering and death that could be avoided, but could even set you back on the road to try to get economic recovery.

Those comments reverberated in global markets.

Over and above the recent resurfacing of cases in countries such as China and Germany, Dr Fauci's comments pack in more arguments against a rapid reopening of US states which had been supported by President Donald Trump and fueled the gains seen for US markets of late," Jingyi Pan of IG said in a report.

Governments have been loosening restrictions as they try to staunch the economic carnage from pandemic shutdowns, despite signs of fresh outbreaks in some countries, such as China and South Korea.

In China, where the virus first surfaced, authorities announced seven new cases on Wednesday. Six were in Jilin province, in the northeast, where alert levels were raised and rail connections suspended.

South Korea reported 26 additional cases of the coronavirus over the past 24 hours amid a new spike in infections linked to nightclubs in Seoul.

Pakistan, meanwhile, confirmed 2,000 new positive coronavirus cases in a single day, just days after its prime minister, Imran Khan, eased lockdown restrictions and stepped up the return of Pakistanis stranded overseas despite pleas for stricter controls by Pakistan's medical professionals.

Britain's FTSE 100 slipped 0.9% to 5,941 after official figures showed the British economy shrank by 2% in the first quarter of the year from the previous three-month period as restrictions on economic activity were ramped up ahead of a coronavirus lockdown that began in late March.

The CAC 40 in Paris sank 1.7% to 4,398. Germany's DAX lost 1.4% to 10,665. Wall Street looked set for a recovery, however, with the future for the S&P 500 up 0.6% while the future for the Dow industrials gained 0.7%.

Markets will essentially be in wait-and-see mode for the next two to four weeks as investors gauge how reopenings are going, analysts said.

No one, and I mean no one, including corporations, wants to wear the scarlet letter for being responsible for the secondary outbreak, Stephen Innes of AxiCorp said in a commentary.

So while re-openings may occur, they will only happen in a gradual context where social distancing rules permit or workplace safety can be exercised."