A look at the day ahead from Dhara Ranasinghe, senior markets correspondent, EMEA. The views expressed are her own.
U.S. 10-year Treasury yields are at their lowest since mid-May, the safe-haven yen is at a two-week high, Asian shares and U.S. stock futures are down sharply. European stocks have just opened down.
Optimism that the world economy will make a swift recovery from the coronavirus shock, driving a stellar rally in stocks in recent weeks, is suffering a setback.
No need to look too far to see why: More than 60,500 new COVID-19 infections were reported across the United States on Thursday, setting a one-day record. In Japan, Tokyo reported a record daily high of more than 240 new infections on Friday, and according to media reports, Hong Kong is to suspend all schools due to a spike in coronavirus cases.
Australia meanwhile plans to halve the number of citizens allowed to return home from overseas each week as it struggles to contain a COVID-19 outbreak in the country's second most populous city.
Add fresh signs of U.S./China tensions into the mix and it's no surprise that world markets are heading for a sombre end to the week. The United States on Thursday imposed sanctions on the highest-ranking Chinese official yet over alleged human rights abuses against the Uighur Muslim minority.
Shares in China fell from a five-year high, the first decline in more than a week. MSCI's index of Asian shares outside Japan dropped more than 1% and Japan's Nikkei fell more than 1%.
Emerging-market stocks had their worst day in more than three weeks. MSCI's emerging currencies index shed 0.3%, also its worst day since June 16, with South Africa's rand falling 0.6%. With oil prices down more than 1%, Russia's rouble slipped 0.3%.
In Europe, Irish Finance Minister Paschal Donohoe was elected as head of the Eurogroup. He believes there is a will in the European Union to reach an agreement on a recovery fund despite ongoing differences between members.
But in contrast, the European Union's chief Brexit negotiator said on Thursday that "significant divergences" persisted in talks with Britain on their relationship from 2021.
Safe-haven currencies are in favour, with the dollar index higher and the yen at its strongest in two weeks. U.S. 10-year Treasury yields are back below 0.60%. A week ago, Germany's benchmark 10-year Bund suffered its worst week in a month. Now it's trading at its lowest levels in over a week at -0.48% and is down almost 5 bps in total this week.
Fitch Ratings is due to review Italy later on Friday, but no action is expected after the ratings agency downgraded Italy in an unscheduled review in late April.
European stocks are set to finish this weak broadly unchanged in what would be one of the flattest weekly performances in 2020 for the STOXX 600 index.
The pan-European index is down 0.5% so far for the first four trading days of the week, with investors waiting for the second-quarter earnings season to begin in earnest next week.
In a taste, perhaps, of what's to come from the healthcare sector, German genetic testing firm Qiagen reported a 68% rise in earnings per share amid strong demand for products used in coronavirus testing. Merck said it was opening an M Lab Collaboration Centre in Shanghai to help bio pharmaceutical and biologics companies improve their processes.
Hit hard by the coronavirus, Swiss duty-free operator Dufry is down over 5%. Nordex shares rose 3.9% in pre-market trade after the company won an order from Spain.
Reporting by Dhara Ranasinghe, editing by Larry King