Caution gripped Asian share markets on Monday on expectations a busy week of corporate earnings reports and economic data will drive home the damage done by the global virus lockdown, while a glut of supply sent US crude spiraling to 20-year lows.
Japan reported its exports fell almost 12% in March from a year earlier, with shipments to the United States down over 16%. Early readings on April manufacturing globally are due on Thursday and are expected to show recession-like readings.
MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.2% in slow trade, with a pause needed after five straight weeks of gains. Japan's Nikkei fell 0.9% and Shanghai blue chips 2.4% even as China cut benchmark interest rates as widely expected.
E-Mini futures for the S&P 500 ESc1 slipped 0.2%, having jumped last week on hopes some US states would soon start to re-open their economies.
US President Donald Trump said Sunday that Republicans were "close" to getting a deal with Democrats on a support package for small business.
But the US Centers for Disease Control and Prevention reported an increase of 29,916 in new infections and said the number of deaths had risen by 1,759 to 37,202.
The S&P 500 has still rallied 30% from its March low, thanks in part to the extreme easing steps taken by the Federal Reserve. The Fed has bought nearly $1.3 trillion of Treasuries alone, and many billions of non-sovereign debt it would historically have never gone near.
"The Fed will be a major buyer of risky assets in the coming months, and has displayed its willingness to backstop virtually any part of the domestic financial system in trouble," said Oliver Jones, a senior markets economist at Capital Economics.
Yet the particular composition of the S&P 500 was also a major factor, he added, as three sectors relatively resilient to a virus-induced lockdown — IT, communications services and healthcare — make up around 50% of the index.
Indeed, Microsoft, Apple, Amazon, Alphabet and Facebook account for more than a fifth of the index.
"What's more, the S&P 500 is skewed toward a few ultra-large firms, some of which are also in those sectors. Their sheer size might make them better able to weather a few months of dramatically-low revenues than most."
The rebound in the S&P 500 therefore likely overstated optimism on the economy, Jones argued, noting European benchmark equities indices and US small cap indices were still in bear market territory.
Bond markets suggested investors expected tough economic times ahead with yields on US 10-year Treasuries steady at 0.64%, from 1.91% at the start of the year.
That decline has shrunk the US dollar's yield advantage over its peers and left it rangebound in recent weeks. So far in April, the dollar index has wandered between 98.813 and 100.940 and was last at 99.837.
The dollar was a fraction firmer on the yen on Monday at 107.77 but again well within recent ranges, while the euro idled at $1.0868.
Gold had recoiled to $1,679 per ounce XAU=, having touched a 7-1/2 peak of $1,746.50 last week.
Oil prices remained under pressure as the global lockdown saw fuel demand evaporate, leaving so much extra supply countries were finding it hard to find space to store it.
So great was the near-term glut that the May futures contract for US crude was trading down 15% at $15.54 a barrel CLc1, while June shed 5% to $23.71 CLc2.
Brent crude LCOc1 does not have the same storage problems and its June contract was off only 25 cents at $27.83 a barrel.