MORNING BID-Virus scuppers hopes for V-shaped recovery

(A look at the day ahead from EMEA deputy markets editor Sujata Rao. The views expressed are her own.) The World Health Organization's emergencies expert Mike Ryan has said it: "This virus may never go away."

So just as hopes have faded of a quick vaccine or remedy against coronavirus, so have expectations of a V-shaped economic rebound. Bearing that in mind, it is not surprising at all that world stocks are back in the red and many of those who stampeded back in April are now rushing to sell.

A global benchmark has pulled back for the third day in a row, with an MSCI global index shedding $1.4 trillion since the start of the week. U.S. Treasury yields have retreated around 10 basis points and the dollar has gained half a percent this week. Yes, Fed chairman Jerome Powell ruled out negative interest rates but his suggestion that the Fed's firepower may not be sufficient to avert deep damage has spooked markets.

We get the latest snapshot of the U.S. employment picture later today – a Reuters poll predicts a seasonally adjusted 2.5 million Americans filed for unemployment benefits in the week ended May 9. That would mean 36 million people have filed claims since March 21, nearly a quarter of the working age population.

Wall Street's three major indexes closed lower for the second day in a row after Powell spoke but there were other, possibly bigger, sources of concern too, not least the risk of a Trade War II – more belligerent tweets from President Donald Trump on China. Then there were reports that the Federal Retirement Thrift Investment Board, a savings plan for federal employees, would not be allocating roughly $50 billion of its international fund to track an equity index that captures China.

Earlier today in Asia, markets were a sea of red. Asian ex-Japan shares plunged more than 1% as fresh coronavirus cases have resurfaced in countries that had assumed they were over the worst, prompting China to close its borders with North Korea and Russia.

The latest sign of economic doom was a record plunge in Australian employment, which dragged the currency down a quarter percent. The Aussie was saved from deeper falls by solid demand from overseas buyers of bonds – a A$19 billion debt sale met with bids for over $53 billion. The yuan is flatlining versus the dollar but Chinese stocks are down 1%.

In Europe, we await comments from ECB Vice President Luis de Guindos, an ECB economic bulletin and a German taxation update, which will bring focus back to the amount of spending needed to tackle the virus fallout. The euro meanwhile slipped under $1.08 against the firm dollar, while sterling hit new five-week lows as dire economic data, Europe's highest virus death toll and fears of a hard Brexit weighed on the British currency.

Amid the corporate doom and gloom there are some happy stories. Shares in Cisco rose 3% last night after it beat quarterly profit estimates thanks to demand for remote-work tools and networking equipment. In Europe, Deutsche Telekom said the pandemic would have a limited impact on its performance and confirmed revenue forecasts. Wirecard, the German payments firm which has suffered accounting accusations and probes, said Q1 was up 26% thanks to a boost from consumer business.

But there was no cheer for banking and financials. Raiffeisen is the latest bank to post big Q1 profit drops and announce additional provisioning. Pressure is also bearing on Lloyd's of London, which said underwriting and investment losses for the global non-life insurance sector could reach a record $203 billion.

We also get a new batch of scratched dividends: Clariant is scrapping a regular dividend though it will stick to an extra $1 billion payout from asset-sale proceeds. Fiat Chrysler and Peugeot also said no ordinary dividends would be paid for 2019 this year. DIARY Minneapolis Fed’s Kashkari speaks BOJ’s Kuroda speaks New Zealand budget UK RICS housing survey April Germany final CPI India WPI inflation April Turkey industrial output March US Initial jobless claims European corp events: Prudential, Deutsche Telekom, Electricite de France, WH Smith, Raiffeisen, Merck, Zurich insurance US corp events: Alibaba, Man United (Editing by Gareth Jones)