TOKYO (Reuters) – Asia’s factory pain showed signs of easing in June, as a rebound in China’s activity offered some hope the region may have passed the worst of the devastation caused by the coronavirus pandemic.

But sluggish global demand and fears of a second wave of infections will tame any optimism on the outlook and keep pressure on policymakers to support their ailing economies.

China’s factory activity grew at a faster clip in June after the government lifted coronavirus lockdown measures, a private sector survey showed on Wednesday.

Manufacturing activity also expanded in Vietnam and Malaysia, pointing to a slow but steady recovery ahead.

Japan and South Korea continued to see manufacturing activity shrink, underscoring the heavy blow the pandemic dealt to their export-reliant economies, although the pace of their declines slowed.

“The chance of a V-shape recovery in the manufacturing sector appears slim at this stage,” said Joe Hayes, economist at IHS Markit, which compiles the survey.

“We’re still awaiting signs of meaningful improvement in Japan’s manufacturing sector, with the PMI for June failing to stage a substantial recovery.”

China’s Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) rose to 51.2 in June from 50.7 in May, marking the highest reading since December 2019. That followed a similarly upbeat reading from the Chinese government’s own PMI on Tuesday.

Vietnam and Malaysia also saw their PMIs crawl back above the 50-mark separating growth from contraction, a welcome sign for policymakers struggling to combat the pandemic’s fallout.

But analysts expect any recovery in the region to be slow.

While China’s export orders shrank at a slower pace, its employment contraction worsened, the PMI showed, underscoring the fragile recovery in the world’s second-largest economy.

“Overall manufacturing demand recovered at a fast clip, but overseas demand remained a drag,” said Wang Zhe, senior economist at Caixin Insight Group.

Japan’s PMI rose to a seasonally adjusted 40.1 in June, while South Korea’s PMI ticked up to 43.4 – both remaining far below the boom-or-bust threshold of 50.

Separately, a Bank of Japan survey showed big manufacturers’ confidence sinking to levels last seen during the 2009 global financial crisis, reinforcing expectations the country was sinking deeper into recession.

“If demand doesn’t rebound fast enough, companies will have to shed jobs,” said Shinichiro Kobayashi, senior economist at Mitsubishi UFJ (NYSE:MUFG) Research and Consulting. “That will delay Japan’s economic recovery, which could end up in a L-shape.”

Investing.com – European stock markets pushed largely higher Monday, amid confidence in the global economic recovery despite an ever-rising number of Covid-19 cases.

At 3:35 AM ET (0735 GMT), the DAX in Germany traded 0.5% higher, France’s CAC40 rose 0.1%, the U.K.’s FTSE index was flat.

The profits of Chinese industrial enterprises rebounded in May for the first time since November 2019, data confirmed Sunday, signaling the world’s second-largest economy is continuing to recover from the coronavirus shutdowns.

This is important news for Europe, and particularly Germany, as China is one of the largest export markets for European goods.

German Chancellor Angela Merkel is set to host French President Emmanuel Macron for talks later Monday. The two leaders are likely to discuss how to get agreement on the recovery fund for the region given opposition to the Franco-German inspired plan to distribute the funds to hard hit areas as(repayable) loans, or as grants. The International Monetary Fund weighed into the debate, with Chief Economist Gita Gopinath saying in Der Spiegel that a substantial part of the European Union’s package of measures must consist of grants.

Still, worries remain over the spread of the coronavirus, with the World Health Organization reporting almost 190,000 new cases for the 24-hour period through early Sunday, a new high. 

This means the total number of global Covid-19 cases has now topped the 10 million mark, with more than 500,000 deaths recorded globally. Despite the spite in infection numbers, mortality rates are much lower than during the first wave of the pandemic, mainly because the new infections have been largely confined to younger people.

The EU-U.K. free trade negotiations are also scheduled to restart this week in Brussels, with time running out and few signs of any progress made in the negotiations over the future relationship.

Economic data centers around the European economic confidence indicators for June, due at 5 AM ET (0900 GMT), along with preliminary inflation data for June from Germany and Spain, and consumer and mortgage lending from the U.K.

In corporate news, Airbus (PA:AIR) stock climbed 1.3% despite CEO Guillaume Faury stating the aircraft manufacturer is assuming a 40% drop in production over the next two years due to the coronavirus crisis. He added that the company intends to announce possible job cuts before the end of July, thus cutting costs.

Oil prices fell back Monday, amid worries that the increase in the number of global Covid-19 cases which has led some countries to resume partial lockdowns could hurt fuel demand. Years of low natural gas prices finally forced Chesapeake Energy (NYSE:CHK) to seek bankruptcy protection in recent years over the weekend.

At 3:35 AM ET, U.S. crude futures traded 1.6% lower at $37.87 a barrel. The international benchmark Brent contract fell 1.4% to $40.34.

Elsewhere, gold futures rose 0.1% to $1,782.05/oz, while EUR/USD traded at 1.1248, up 0.3%.

SINGAPORE (Reuters) – Oil prices slid for a second straight session on Monday as coronavirus cases rose in the United States and other places, leading countries to resume partial lockdowns that could hurt fuel demand.

Brent crude (LCOc1) dropped 72 cents, or 1.8%, to $40.30 a barrel by 0231 GMT, while U.S. crude (CLc1) was at $37.82, down 67 cents, or 1.7%.

Brent crude is set to end June with a third consecutive monthly gain after major global producers extended an unprecedented 9.7 million barrels per day supply cut agreement into July, while oil demand improved after countries across the globe eased lockdown measures.

However, global coronavirus cases exceeded 10 million on Sunday as India and Brazil battled outbreaks of over 10,000 cases daily. New outbreaks are reported in countries including China, New Zealand and Australia, prompting governments to impose restrictions again.

“The second wave contagion is alive and well,” Howie Lee, economist at Singapore’s OCBC bank said. “That is capping the bullish sentiment that we’ve seen in the last six to eight weeks.”

Other factors restricting oil prices’ advance at this stage include poor refining margins, high oil inventories and the resumption of U.S. production, Lee said.

Despite efforts by OPEC+ – the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia – to reduce supplies, crude inventories in the United States, the world’s largest oil producer and consumer, have hit all-time highs. [EIA/S]

“There is also a risk that gains in prices recently could see some U.S. shale producers restart wells,” ANZ analysts said.

Even as the number of operating oil and natural gas rigs dropped to a record low last week, higher oil prices are prompting some producers to resume drilling.

“In the next one-two weeks, we should see an uptick in rig count commensurate with the pick-up in oil production,” OCBC’s Lee said.

Elsewhere, U.S. shale oil pioneer Chesapeake Energy Corp (N:CHK) filed for bankruptcy protection on Sunday as it bowed to heavy debts and the impact of coronavirus outbreak on energy markets.

SYDNEY (Reuters) – Asian share markets began the week with a cautious tone 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 U.S. dollar.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.6% and further away from a four-month top hit last week. Japan’s Nikkei shed 1.3% and Chinese blue chips 0.6%.

In a more promising sign, E-Mini futures for the S&P 500 recouped their early losses to edge up 0.3% and EUROSTOXX 50 futures added 0.2%. FTSE futures dipped 0.2%.

Wall Street had faltered on Friday as some U.S. 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 U.S. 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 (NYSE:JPM) 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 U.S. equities but move EM equities to neutral and stay neutral U.S. credit.”

Sovereign bonds benefited from the shift to safety with yields on U.S. 10-year notes falling to 0.64%, having briefly been as high as 0.96% early in June.

The U.S. 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 $1.1240 having found solid support around $1.1167. [USD/]

It is an important week for U.S. 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.

“U.S. economic data will reinforce that the economy is through the worst of the recession in our view,” said CBA currency analyst Joseph Capurso.

“But a double‑dip recession is possible if widespread restrictions are reimposed, leading to a surge in the dollar.”

In commodity markets, gold held near its highest since early 2012 at $1,771 an ounce. [GOL/]

Oil prices slipped amid concerns the pandemic would slow the reopening of some economies and thus hurt demand for fuel. [O/R]

Brent crude futures fell 70 cents to $40.32 a barrel, while U.S. crude lost 62 cents to $37.87.

Investing.com – European stock markets pushed higher Friday, amid signs the region was returning more towards normalcy despite an ever-rising number of Covid-19 cases elsewhere.

At 3:55 AM ET (0725 GMT), the DAX in Germany traded 0.6% higher, France’s CAC40 rose 1%, the U.K.’s FTSE index was up 1.1%.

The euro zone is “probably past” the worst of the economic crisis caused by the coronavirus pandemic, European Central Bank President Christine Lagarde said on Friday, while urging authorities to prepare for a possible second wave.

“We probably are past the lowest point and I say that with some trepidation because of course there could be a severe second wave,” Lagarde told an online event. The U.S., the world’s economic driver, has posted a record number of new coronavirus cases, with state health departments reporting a total of over 37,000 new cases on Thursday. In fact, Texas was forced to pause its re-opening, with Houston’s intensive-care wards reaching capacity.

Britain announced Friday that it is working on a plan to relax its quarantine for international travellers with some countries where there is a lower risk of contracting the novel coronavirus.

This has helped some of the airline stocks that were critical of the original move. EasyJet (LON:EZJ) rose 2.4%, IAG (LON:ICAG), which owns British Airways, rose 2.8%, and Ryanair (LON:RYA) climbed 1.2%.

Air France KLM (PA:AIRF) also jumped 5% after governments of France and Netherlands reached a deal on an aid package for the airline group, with the latter saying it would provide a 3.4 billion euro ($3.81 billion) financing package.

Elsewhere, Marston’s (LON:MARS) slumped 5.8% after the British pub operator said it took a hit of up to GBP40 million in the first half of the year from the coronavirus pandemic.

Aston Martin (LON:AML) stock fell over 11% after the luxury carmaker said it would issue new shares worth up to 20% of its existing equity capital to ride out the coronavirus crisis.

Additionally, Vonovia (DE:VNAn) stock rose 1.4% after announcing it has acquired a 2.6% stake in Vesteda, a Dutch residential investor – the German real-estate company’s first step into the Dutch residential property market.

Oil prices rose Friday, helped by signs of fuel demand recovering globally, with traders tending to overlook the increase in coronavirus infections in many U.S. states and the recent build in inventories which suggest a revival in U.S. crude production.

At 3:10 AM ET, U.S. crude futures traded 0.8% higher at $39.03 a barrel. The international benchmark Brent contract rose 0.9% to $41.42.

Elsewhere, gold futures rose 0.3% to $1,775.10/oz, while EUR/USD traded at 1.1229, up 0.1%.

WASHINGTON (Reuters) – U.S. President Donald Trump signed a memorandum aimed at protecting American lobster fishermen who have found export markets drying up, a senior White House adviser said on Wednesday, adding that China could end up facing new tariffs.

“If those purchase commitments are not met, the United States Trade Representative has been directed to use his discretion to impose … reciprocal tariffs on the China seafood industry,” White House trade adviser Peter Navarro told reporters, referring to $150 million in purchase commitments Beijing made under the so-called Phase 1 U.S.-China trade deal.

In the memorandum, Trump also directed the U.S. Agriculture Department to provide lobster fishermen with the same type of assistance other parts of the agriculture sector are receiving to protect them from harmful trade practices, Navarro said.

He said that assistance would both apply retroactively to harm they have already suffered due to China’s trade practices, and harm they might suffer going forward.

Navarro said the memorandum also called on the U.S. trade representative to come forward with recommendations over the next 90 days on how to address a loss of market share American lobster fishermen have faced due to a Canada-Europe trade agreement that has helped Canadian competitors.

“We’ve seen a tremendous displacement of exports,” he told reporters at the White House.

Investing.com – European stock markets weakened Wednesday, with investors fretting about the increasing number of coronavirus cases worldwide amid fears this will lead to the reintroduction of generalized lockdown measures.

At 3:30 AM ET (0730 GMT), the DAX in Germany traded 0.8% lower, France’s CAC40 fell 0.6%, the U.K.’s FTSE index was down 0.7%.

Stocks in Europe have rallied hard since hitting a low in March, with gains driven by fiscal and central bank stimulus around the globe and a gradual easing of restrictions.  The U.K. announced a major relaxation of restrictions on its crucial service sector on Tuesday.

However, fears are mounting that the removal of these restrictions may have come too quickly and a second wave of the Covid-19 virus is on its way. 

German Health Minister Jens Spahn on Wednesday stressed that the coronavirus remains a risk after the western German state of North Rhine-Westphalia on Tuesday put two municipalities back into lockdown following an outbreak at a meatpacking plant.

Still, there remains some optimism about the economic recovery, particularly after Tuesday’s upbeat business surveys, with France a stand-out as lockdown loosening there led to a modest return to growth.

“To some extent, this is obviously a technical rebound. The fact that PMIs are still in contractionary territory illustrates the two messages: a sense of relief that a sharp rebound is possible but at the same time caution against too much optimism,” said analysts at ING, in a research note.

The key economic indicator due for release Wednesday will be the influential German Ifo Business Climate survey for June, at 4:00 AM ET (0800 GMT), which is seen recovering. 

The French index for business confidence surged 18 points to 78, earlier Wednesday, the sharpest increase on record, statistics agency Insee said. 

In corporate news, Dufry (SIX:DUFN) stock climbed 1.5% after the Swiss-based travel retailer said it would slash staffing costs to reflect previously forecast hefty potential sales declines on the back of the coronavirus pandemic.

Atos (PA:ATOS) stock climbed 0.8% after the French information-technology company confirmed its goals for 2020, while maintaining its dividend.

Nokia (NYSE:NOK) stock climbed 0.5% after the Finnish telecom equipment maker announced its new chief executive Pekka Lundmark will join the company on August 1, a month earlier than planned.

Oil edged higher Wednesday, consolidating after losses caused by a second consecutive week of increases in U.S. crude supplies.

The American Petroleum Institute estimated a build of 1.749 million barrels for the week ended June 19 on Tuesday, much bigger than the 300,000 barrel build expected. Attention now turns to the government figures due at 8:30 AM ET (1230 GMT), where a small build is expected.

At 2 AM ET, U.S. crude futures traded 0.1% higher at $40.42 a barrel. The international benchmark Brent contract rose 0.84 to $42.80.

Elsewhere, gold futures rose 0.2% to $1,785.55/oz, while EUR/USD traded at 1.1300, down 0.1%.

WARSAW (Reuters) – Google (NASDAQ:GOOGL) will invest as much as $2 billion in a data centre in Poland to deal with cloud services, the Puls Biznesu daily said on Wednesday.

News of the investment follows an announcement by Microsoft (NASDAQ:MSFT) in May that it will invest $1 billion in a Polish data centre, as the largest economy in the European Union’s eastern wing tries to position itself as a regional technology hub.

“Region Google Cloud in Warsaw is the biggest investment in infrastructure of this type in Poland,” the paper quoted Magdalena Dziewguc, Google Cloud’s business development director in Poland and Central and Eastern Europe, as saying.

“We are getting ready for it to be operational at the beginning of 2021.”

Jadwiga Emilewicz, Poland’s deputy prime minister, told the paper she estimated Google could invest $1.5 billion to $2 billion in the project.

SYDNEY (Reuters) – Asian shares crept to a four-month high on Wednesday as investors remained stubbornly upbeat on the outlook for a re-opening of the global economy even as cases of the coronavirus looked to be accelerating to new peaks.

MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.39% to reach its highest since early March, though turnover was light.

Japan’s Nikkei firmed 0.1% and Chinese blue chips 0.3%. Caution was still evident elsewhere with E-Mini futures for the S&P 500 off 0.1% and EUROSTOXX 50 futures easing 0.7%.

On Wall Street, the Dow had ended Tuesday 0.5% higher, while the S&P 500 gained 0.43% and the Nasdaq 0.74%.

News on the coronavirus was hardly encouraging with several U.S. states seeing record infections and the death toll in Latin America passing 100,000 on Tuesday, according to a Reuters tally.

The European Union is even prepared to bar U.S. travellers because of the surge of cases in the country, putting it in the same category as Brazil and Russia, the New York Times reported.

Yet the market assumes there is a very high bar to shutting down economies again, so the impact on business activity will not be too great – at least as yet.

The dogged optimism about the global economy was supported by upbeat surveys of manufacturing from Europe, with France a stand-out as lockdown loosening there led to a modest return to growth.

That followed solid June readings from much of Asia, though Japan did disappoint.

“One surprise in the recent data has been the resiliency of activity data in emerging Asia even as the global economy slowed sharply and global demand remains below pre-pandemic levels,” said analysts at JPMorgan (NYSE:JPM) in a note.

“This outcome largely appears to be due to the tech sector outperforming non-tech, most likely reflecting in part a temporary work-from-home boost to demand.”

The better European data combined with the positive risk mood to keep the U.S. dollar under pressure. Against a basket of major currencies it slipped back to 96.578 from a top of 97.719 at the start of the week.

The euro edged up to $1.1321, having been as low as $1.1167 on Monday, while the dollar eased to 106.47 yen after touching a six-week low of 106.06 at one stage.

“The dollar and risk sentiment are likely to remain broadly negatively correlated, barring the U.S. displaying clear and enduring leadership in the global economic recovery, something hard to square with the grim U.S. news on COVID,” said Ray Attrill, head of FX strategy at NAB.

In commodity markets, the decline in the dollar and endless cheap liquidity from central banks helped lift gold to its highest since October 2012. The metal was last at $1,770 an ounce.

Oil futures eased from four-month highs after U.S. crude inventories rose a surprisingly large 1.7 million barrels last week, according to industry data. That compares with analysts’ expectations for a 300,000-barrel build. U.S. government data will be released on Wednesday. [O/R]

Brent crude futures declined 18 cents to $42.45 a barrel, while U.S. crude fell 23 cents to $40.14.

(Reuters) – The United States is planning to re-impose tariffs on aluminum imports from Canada, Bloomberg reported late on Monday, citing people familiar with the matter.

If Canada declines to impose export restrictions, the United States will announce on Friday the re-imposition of 10% tariffs on aluminum from the country, the report said.

The tariffs would then be implemented by July 1, the report added, which is also when a new U.S.-Mexico-Canada (USMCA) trade agreement is expected to take effect.

Some industries, including automakers, had been asking for a delayed implementation of the agreement due to the difficulties they are facing amid the coronavirus pandemic.

The USMCA replaces the 26-year-old North American Free Trade Agreement between the three economies.

The office of the United States Trade Representative did not immediately respond to a Reuters request for comment on aluminum tariffs outside regular business hours.

Earlier in the day, the U.S. Supreme Court turned away a challenge to President Donald Trump’s tariffs on imported steel brought by an industry group that had argued that a key part of the law under which he imposed the duties violates the U.S. Constitution.

Trump signed a proclamation this year increasing tariffs on derivative steel products by an additional 25% and on derivative aluminum products by an additional 10%, from which countries including Canada and Mexico were exempted.