Fears of Second Wave of Coronavirus Rattle Global Markets, Stocks Fall

The pan-European STOXX 600 fell 2.5 percent with all sectors, while Japan's Nikkei fell 3.5 percent and South Korean shares tumbled 4.8 percent

Fears that the second wave of COVID-19 infections is underway sent jitters across global markets on Monday with stocks and oil under pressure while investors bought into safe havens such as German government debt.

Beijing reported its second consecutive day of record numbers of virus cases and hospitalizations rose in some US states, leading investors to reassess their assumption of a swift V-shaped recovery.

"I am convinced that if cases continue to rise again, market participants will clearly re-evaluate market valuations and their assumptions", said Stephane Ekolo, an equity strategist at TFS Derivatives in London. "Market are pricing a too-optimistic recovery, in my opinion, and there could be a reality check coming rather sooner than later," he said.

Markets Across The World Fall

The pan-European STOXX 600 fell 2.5 percent with all sectors and regional markets trading deep in the red after losses accelerated in the final hours of trading in Asia. Earlier, Japan's Nikkei fell 3.5 percent and South Korean shares tumbled 4.8 percent. Futures for the S&P 500 also extended losses, shedding 2.9 percent.

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The retreats follow a global rally since late March, fuelled by the central bank and fiscal stimulus and optimism about countries gradually lifting the lockdowns implemented to stop the spread of the novel coronavirus.

A number of analysts, however, have warned about a possible disconnect between anticipation of a dire global recession and the optimism in stock markets, with the Nasdaq hitting record highs even though US unemployment has surged.

Crude Futures Down

Eurozone bond yields edged down as investors bought safer assets such as government bonds. Germany's 10-year bond yield was near three-week lows at -0.46 percent. Brent crude futures fell 2.7 percent, to $37.69 a barrel. The US West Texas Intermediate crude futures were down 4.1 percent, to $34.78 a barrel.

Oil investors await OPEC+ committee meetings later this week that will advise the producer group and its allies on output cuts. In currencies, the dollar index rose to 97.27, flirting with a 10-day high, while risk-sensitive currencies such as the Norwegian and Swedish crowns suffered, trading around two-weeks lows.

The euro slipped 0.1 percent versus the dollar at $1.1243 Worldwide coronavirus cases have crossed 7.86 million with 430,501​ deaths, according to a Reuters tally.