MORNING BID-Locking down?

(A look at the day ahead from EMEA deputy markets editor Sujata Rao. The views expressed are her own.) Ten million and counting. That’s how many people have been infected by the new coronavirus, while half a million have been killed by it, a Reuters tally shows. But lockdowns are the indicator to watch for and California’s decision to close some bars is an ominous sign. Reopening plans have been paused or postponed in Texas, Florida and Arizona and in the UK, the city of Leicester could be locked down after a surge in infections.

Full lockdowns still look unlikely — Germany and China for instance opted for partial and localised restrictions — but it’s a blow for hopes of economic bounceback.

With that in mind, markets are off to a shaky start. World stocks are at two-week lows, Asia fell 1% and Japan’s Nikkei is down 2%. Wall Street may build on Friday’s 2-3% losses and emerging equities fell for their fourth straight, losing 0.9%.

Chinese shares shrugged off data showing a 6% rebound in May industrial profits; after all profits are still down 20% year-on-year. Similarly, Japanese retail sales grew 2.2% in May but the year/year picture is a dismal minus 12.3%.

Finally, storm clouds are brewing for tech, Wall’s Street’s top performing sector, up 10% year-to-date. Facebook fell more than 8% on Friday due to an ad boycott campaign – more than 160 companies, including Verizon and Unilever, have agreed to stop buying ads on the social media platform.

In terms of today’s events, France’s Emmanuel Macron and Germany’s Angela Merkel are meeting to discuss strategies to get pan-EU support for a planed recovery fund. EU-UK free trade talks will also restart in Brussels.

What are the signals from policymakers who have helped keep stock markets aloft?

China’s central bank said it could increase the proportion of smaller loans at lower rates. Britain will lay out infrastructure investment plans. Indonesia’s central bank may go down the route of buying government bonds to plug a larger deficit.

However, South Korea ruled out further supplementary budgets, pushing stocks down 1.5%. A series of speakers hit the wires today — among them the New York Fed’s John Williams and Bank of England’s Andrew Bailey.

But for all policymakers’ efforts, a gradual flatlining in economic activity looks inevitable after the positive surprises of May and June.

That worry is evident in 10-year U.S. yields falling 30 basis points from early-June levels and the S&P500 index looking set to snap a two-month winning streak.

But the dollar isn’t benefiting from any safe-haven demand, slipping off one-week highs and CFTC data shows speculators net short dollar positions are on the rise. Gold, however, remains a whisker off 8-year highs, with bullish gold positions building further.

In European corporate news, shares in Germany’s BioNTech have surged 5% on news that Singapore’s wealth fund and other investors will buy a stake. It is developing a coronavirus vaccine with Pfizer.

The day’s biggest mover is stricken Wirecard, up 30% after it said it would proceed with business activities after filing for insolvency. Airbus is down after its CEO said he assumed a 40% production drop in the next two years. AMS is up 7% after Reuters reported the EU is approving its acquisition of lighting group Osram.

Also in M&A, Spain’s Iberdrola raised its bid for Australian wind and solar firm Infigen. International Consolidated Airlines Group is reviewing its acquisition of Air Europa, the CEO of IAG-owned Iberia was quoted as saying.

Commerzbank’s board could approve more branch closures and job cuts, a German newspaper reported. Italy’s Monte dei Paschi di Siena will hold a board meeting to approve plans to reduce bad loans.

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