Asian share markets got off to a shaky start on Monday as the relentless spread of the coronavirus finally made investors question their optimism on the global economy, benefiting safe harbour bonds and the US dollar.
MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.2% and further away from a four-month top hit last week.
Japan's Nikkei shed 1.5% and South Korean stocks 1.4%. E-Mini futures for the S&P 500 lost 0.3%.
Wall Street had faltered on Friday as some US States reconsidered their reopening plans. The global death toll from Covid-19 reached half a million people on Sunday, according to a Reuters tally.
About one-quarter of all the deaths so far have been in the United States, with cases surging in a handful of southern and western states that reopened earlier.
"The increase in US Covid-19 infection rates has dented momentum across markets despite the improvements in the global economy, which continues to beat most data expectations," wrote analysts at JPMorgan in a note.
"Our strategists remain sanguine and recommend to buy on dips but also selectivity," they added. "Traditional hedges like JPY vs USD, USD vs EM FX, Gold and quality stocks are still outperforming this month. We stay overweight US equities but move EM equities to neutral and stay neutral US credit."
Sovereign bonds benefited from the shift to safety with yields on US 10-year notes falling to 0.63%, having briefly been as high as 0.96% early in June.
The US dollar went the opposite direction, rising to 97.461 against a basket of currencies from a trough of 95.714 earlier in the month.
It was a shade higher on the yen at 107.20 on Monday, but well within the recent range of 106.06 to 107.63. The euro stood at $1.1222 having found solid support around $1.1167.
It is an important week for US data with the ISM manufacturing index on Wednesday and payrolls on Thursday, ahead of the Independence Day holiday. Federal Reserve Chair Jerome Powell is also testifying on Tuesday.
In commodity markets, gold held near its highest since early 2012 at $1,771 an ounce.