A mixed night’s trading saw risk assets stall on reports of rising Covid-19 infection rates. The support from the Fed’s corporate bond sugar hit faded as Beijing moved to a higher emergency level as it deals with a secondary outbreak. Market reactions were muted and various. European stocks rose and bond fell, while US trading saw the reverse. However ongoing support for haven currencies and gold speaks to investor caution.

Crude oil prices fell despite a drop in inventories. US crude stockpiles grew slightly, but draws on gasoline and distillates saw demand outstrip supply over the week. Base metals were mixed, with aluminium and copper adding to recent gains but nickel and iron ore falling. Precious metals were similarly indecisive, with a lift in gold offset by falling silver prices.

Asia Pacific markets are taking the disjointed action tentatively. Regional share indices are modestly lower in overnight futures trading, with the exceptions of Singapore, Malaysia and Taiwan. New Zealand shares are down around 1% in early trading after first quarter GDP data showed a worse than feared contraction. The New Zealand dollar surprisingly spiked in response to the data, but is now trading lower.

Data released later this morning is forecast to show a loss of 80,000 Australian jobs in May, taking the unemployment rate to 6.9%. A better than forecast read could spark share buying, although investors may “look through” a weak read. Today’s expiry of the June futures contract will bring heightened liquidity and higher unpredictability.

Brexit and the severity of the UK Covid-19 outbreak mean the Bank of England is not expected to change rates or its watching stance tonight. However the Swiss National Bank is under pressure from a stronger franc. Consensus favours no change to the lowest cash rate in the world at -0.75%, but a surprise cut could help with currency issues.

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