SYDNEY (Reuters) – Asian share markets got off to a shaky start on Monday as the relentless spread of the coronavirus finally made investors question their optimism on the global economy, benefiting safe harbour bonds and the U.S. dollar.

MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.2% and further away from a four-month top hit last week.

Japan’s Nikkei shed 1.5% and South Korean stocks 1.4%. E-Mini futures for the S&P 500 lost 0.3%.

Wall Street had faltered on Friday as some U.S. States reconsidered their reopening plans. The global death toll from COVID-19 reached half a million people on Sunday, according to a Reuters tally.

About one-quarter of all the deaths so far have been in the United States, with cases surging in a handful of southern and western states that reopened earlier.

“The increase in U.S. COVID-19 infection rates has dented momentum across markets despite the improvements in the global economy, which continues to beat most data expectations,” wrote analysts at JPMorgan in a note.

“Our strategists remain sanguine and recommend to buy on dips but also selectivity,” they added. “Traditional hedges like JPY vs USD, USD vs EM FX, Gold and quality stocks are still outperforming this month. We stay overweight U.S. equities but move EM equities to neutral and stay neutral U.S. credit.”

Sovereign bonds benefited from the shift to safety with yields on U.S. 10-year notes falling to 0.63%, having briefly been as high as 0.96% early in June.

The U.S. dollar went the opposite direction, rising to 97.461 against a basket of currencies from a trough of 95.714 earlier in the month.

It was a shade higher on the yen at 107.20 on Monday, but well within the recent range of 106.06 to 107.63. The euro stood at $1.1222 having found solid support around $1.1167.

It is an important week for U.S. data with the ISM manufacturing index on Wednesday and payrolls on Thursday, ahead of the Independence Day holiday. Federal Reserve Chair Jerome Powell is also testifying on Tuesday.

In commodity markets, gold held near its highest since early 2012 at $1,771 an ounce.

Oil prices slipped amid concerns the pandemic would slow the reopening of some economies and thus hurt demand for fuel.

Brent crude futures fell 62 cents to $40.40 a barrel, while U.S. crude lost 60 cents to $37.89.

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