GENEVA — The world, and the financial markets, are not out of the woods just yet. US equities slumped as panic regarding a second wave of coronavirus infection following the business reopening dashed the investor sentiment amid the US’s top infectious disease expert Anthony Fauci warned that reopening the economy too early could have serious consequences. Over the past 48 hours, the investor sentiment made a sharp U-turn from excitement of business reopening to the anxiety that the things could go terribly wrong. And this time, governments and central banks are left with limited ammunition to fight back an aggravated global health and economic crisis. The S&P500 and Nasdaq closed 2% lower on Tuesday, equities were mixed in Asia. Indian Nifty gained 2%, Hang Seng was flat, while Nikkei (-0.41%), ASX 200 (-0.21%) and Shanghai’s Composite (-0.18%) recorded losses. Activity on FTSE (-0.95%) and DAX (-1.44%) futures hint at another day of sell-off across the European equities. On the data deck, the Japanese current account surplus narrowed to 1.917 trillion yen in March from 2.787 trillion yen printed a month earlier. The goods surplus fell rom 0.70 to 0.10 trillion yen, while the services deficit turned positive. Still, the Japanese yen remained strong on the back of an increased safe haven demand. The USDJPY traded below the 107.30 mark and is set to make a renewed attempt below the 107 mark. Australian consumer sentiment, on the other hand, improved significantly in May on prospects of the economy getting back on track, however, the market gave little reaction to the data which remained somewhat behind the curve, as live news suggested that this optimism could remain fragile. The AUDUSD slipped and consolidated below the 65 cents mark, and the mounting risk-off sentiment could pave the way for a decline toward the 0.64/0.6380 area. In New Zealand, the interest rates were kept unchanged at the historical low of 0.25% as expected, but the upper limit of the Large Scale Asset Purchase program (LSAP) was almost doubled from $33 billion to $60 billion. The Kiwi tanked to 0.60 against the greenback, on the back of a dovish monetary policy announcement and risk-off outflows. The antipodeans will certainly fall from grace with the mounting anxiety that the post-coronavirus normalization may not be as smooth as the market has priced in. Released this morning, the British production and growth data surprised to the upside. The industrial production slumped by 8.2% y-o-y in March versus 9.3% expected by analysts and the first quarter GDP contracted by 2% versus 2.5% penciled in. The pound shortly rebounded to 1.2280 as the fact that the poor data still beat market expectations, but gains lacked the necessary momentum to fight back the 50-day moving average resistance (1.23) on a rather blurred plan for business reopening in Britain and waning hopes of a satisfactory economic recovery in the coming months. In the UK, as elsewhere, a return to normality will take months, further ballooning the government debt and involving the central bank’s aid to make this debt absorbed by the market. As the governments and central banks are being perfect partners in crime in most developed economies, the mood sours across the Eurozone. The appetite in single currency remains capped by the risk of the European Central Bank’s (ECB) potentially reduced ability to give a comprehensive support to the market amid the German court investigation on the extent of its policy decisions. The euro made a renewed attempt to its 50-day moving average (1.0885) against the greenback yesterday, but hit solid offers at this level. The heavy German clouds hanging on the ECB is also a factor which will likely hit the European stocks more than their US counterparts in case of a renewed panic sell-off, and similarly, hold them back if the global risk appetite improves. Gold remains intractably near the $1,700 per oz. Increased flight to safety and falling US yields give support to the yellow metal below the $1,700 mark, but at the current levels, investors doubt about the gold’s hedging capacity against a renewed panic sell-off across risk assets. In case of strong market headwinds, however, we are confident that the gold price could make that jump to the $1,800 level without too much hesitation. Else, gains in oil markets remained capped as the latest API data showed that the US oil inventories rose by 7.6 million barrels last week. The more official EIA data should confirm a stronger rise in US oil inventories today and fall significantly short of the expectation of 4.1-million rise penciled in by analysts. A new jump in US oil inventories, combined with the renewed worries that the second wave of coronavirus contagion could take a toll on economic recovery prospects, should bring the oil bears in charge of the market and encourage a renewed sell-off toward the $20 mark. — The writer is senior analyst at Swissquote Bank