SYDNEY (Reuters) – Caution gripped Asian share markets on Monday amid 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 U.S. crude spiraling to 20-year lows.

FILE PHOTO: Passersby wearing protective face masks following an outbreak of the coronavirus disease (COVID-19) are reflected on a screen displaying stock prices outside a brokerage in Tokyo, Japan, March 17, 2020. REUTERS/Issei Kato

Japan reported its exports fell almost 12% in March from a year earlier, with shipments to the United States down over 16%. Readings on April manufacturing globally are due on Thursday and are expected to hit recession-era lows.

Better news came from New Zealand where success in containing the virus allowed the government to announce an easing in the country’s strict lockdown from next week.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS eased 0.2% in slow trade, with a pause needed after five straight weeks of gains.

Japan’s Nikkei .N225 fell 1.1%, but Chinese shares .SSEC edged up 0.3% as a benchmark lending rate was lowered.

EUROSTOXX 50 futures STXEc1 rose 1.4% and FTSE futures FFIc1 1.2%. E-Mini futures for the S&P 500 ESc1 slipped 0.2%, having jumped last week on hopes some U.S. states would soon start re-opening their economies.

U.S. President Donald Trump said on Sunday that Republicans were “close” to getting a deal with Democrats on a support package for small business.

The United States has by far the world’s largest number of confirmed coronavirus cases, with more than 750,000 infections and over 40,500 deaths, according to a Reuters tally.

The S&P 500 .SPX 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.

MARKET CONCENTRATION

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,” Jones said. “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 U.S. small cap indices were still in bear market territory.

Bond markets suggested investors expected tough economic times ahead with yields on U.S. 10-year Treasuries US10YT=RR steady at 0.64%, from 1.91% at the start of the year.

That decline has shrunk the U.S. dollar’s yield advantage over its peers and left it rangebound in recent weeks. So far in April, the dollar index =USD 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 107.82 JPY= but again well within recent ranges, while the euro idled at $1.0868 EUR=.

Gold had recoiled to $1,681 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 U.S. crude was trading down almost 20% at $14.68 a barrel CLc1, while June shed 5% to $23.65 CLc2.

Brent crude LCOc1 does not have the same storage problems and its June contract was off only 45 cents at $27.62 a barrel.

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