Positive news about possible vaccines had helped push the MSCI World Index to a record high earlier in the week, but investors pulled back as a host of countries announced record infection rates and tougher lockdowns.
At 1202 GMT, the broad gauge of global equities was trading down 0.3 per cent, pulled lower by weakness in most of Europe’s leading indexes. US stock futures were down 0.1 per cent.
Oil prices also fell 0.4 per cent to 0.9 per cent as virus restrictions crimped demand expectations.
The weaker sentiment was triggered by a late US sell-off that saw the S&P 500 close down 1.1 per cent, following news that the country’s COVID-19 deaths had passed 250,000, setting off a host of lockdowns.
Similarly sombre news in Japan, which saw a record number of cases and a rise in Tokyo’s pandemic alert level, sent the Nikkei down 0.4 per cent. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.8 per cent.
“The markets probably overshot the vaccine news and are probably just retreating slightly now because case numbers are going up,” said Gavin Rochussen, chief executive of UK-based asset manager Polar Capital.
“The vaccine will take time to be delivered, to be administered and so on, and I think what’s happening is markets are realising that ... it’s not just the silver bullet, it will take time.”
The positive vaccine news had continued yesterday after Pfizer said its COVID-19 vaccine was 95% effective and it would apply for emergency US authorisation within days, following a similar recent report from Moderna.
German benchmark 10-year debt yields fell 1.5 basis points to -0.571 per cent and Italy’s 10-year BTP yield was up 0.5 basis points at 0.621 per cent. Both were near recent lows.
“Markets remained in limbo as vaccine hopes and fears about the fallout of still-rising COVID-19 cases cancelled each other out,” Unicredit told clients.
“Rising coronavirus infection numbers and new restriction measures implemented in the US are weighing on appetite for risk,” it said.
Looking ahead, all eyes will be on the U.S. Federal Reserve for signs it could step in with fresh monetary stimulus -- something two officials nodded to on Wednesday. Investors will also await US jobs data at 1330 GMT.
Against a basket of currencies, the dollar was last at 92.543, near its weekly opening high. Euro/dollar shed 0.1 per cent to last trade at $1.1836.
“The vaccines news are a positive medium-term impulse for the global economic outlook and investors are trying to weigh that against the prospect of an imminent stalling of the European and US recovery amid the prospect of extensions of current lockdown measures,” said Rodrigo Catril, a senior FX strategist at NAB.
Sterling weakened, down 0.1 per cent against the dollar and 0.2 per cent per euro, on a report Europe’s leaders would demand the European Commission publish Brexit no-deal plans as the deadline for trade talks go down to the wire.
Gold traders continued to take a longer-term view, betting the COVID-19 vaccines would translate into a quicker economic recovery. That sent the precious metal to a one-week low.
Bitcoin, sometimes regarded as a safe haven or at least a hedge against inflation, also pulled back and last stood at $17,720.