Increasing Covid-19 infection and hospitalisation rates in the USA raised fears of further lockdowns, and weighed heavily on overnight trading. European and US indices slumped and crude oil dropped 5.5%. In contrast, forex traders lifted the US dollar and Japanese yen, investors bought bonds and gold remains near 7 year highs.

Some US states, including Arizona, Florida, California and Texas are seeing increasing infection rates as the national count rose to 35,600 new cases yesterday. Coming on top of surges in Brazil, Germany, India and Australia, among others, they raise the potential for further economically damaging containment measures. Anecdotal evidence that consumer behaviour remained far more conservative despite easing lockdowns, the peak optimism of a v-shaped recovery is fading fast.

Commodity market sentiment soured. Although crude oil grabbed the headlines, base metals fell across the board. Cryptocurrencies bucked the trend with a 0.25% rise, as measure by CMC’s All Crypto Index.

Asia Pacific markets are looking at a damaging day. The strength of the US dollar has reversed recent gains for regional currencies, potentially adding to share selling pressure. Indices in Japan, Hong Kong and Australia are set to open more than 1% lower, although Singapore futures are down closer to 0.5%.

Australia’s national carrier Qantas is in trading halt as it places $1.36 billion in shares with institutional investors. The company will also cut 6,000 jobs, and raise a further $500 million as part of its Covid-19 survival plan.