World stocks spluttered to their lowest level in more than a week on Thursday, as a surge in US coronavirus cases and an IMF warning of an almost 5% plunge in the global economy this year hit the bulls again.

Asia suffered its biggest drop in eight sessions overnight and though Europe’s STOXX 600 recovered from an early 1% fall it remained unsteady, while Wall Street was expected to open 0.5% in the red.

After a white-hot few months for markets that has seen world stocks rebound nearly 40%, nervousness about the impact of COVID-19 was rising again.

In the United States, Florida, Oklahoma and South Carolina reported record increases in new cases on Wednesday and Australia posted its biggest daily rise in two months.

The governors of New York, New Jersey and Connecticut ordered travellers from eight other states to quarantine on arrival, a worry for investors who had mostly been expecting an end to pandemic restrictions.

Disney has delayed the re-opening of theme parks and resorts in California, and Texas is facing a “massive outbreak” and considering new localised restrictions, its governor said.

“During the swift rebound since the March lows, equity markets may have gotten a little ahead of themselves,” wealth manager DWS said in a quarterly Chief Investment Officer report.

With the added pressure of looming half year portfolio reviews, investors were huddling in traditionally safer government bonds and gold.

The International Monetary Fund said on Wednesday it now expects global output to shrink 4.9% this year rather than the 3% it predicted in April.

“There is a little bit of reality bites coming,” said Damian Rooney, senior institutional salesman at stockbroker Argonaut in Perth. “I don’t think there was a particular straw that broke the camel’s back, but people are a little bit twitchy.”

UBS’ chief economist Paul Donovan said, however, that international organisations tend to lag behind and many economists were now revising forecasts up, not down.

“The IMF has been too pessimistic on growth in 27 of the past 30 years. It tends to be significantly too pessimistic when there are big structural changes.”

For now the subdued mood helped the dollar build on broad gains in the FX markets which had lifted it from near a two-week low.

Yields on benchmark 10-year U.S. Treasuries and German Bunds sank to 10-day lows of 0.66% and -0.47% although they remained within their well-worn recent ranges.

Weekly jobless claims data showed weak demand is forcing US employers to lay off workers, even as businesses reopen. Claims totalled a seasonally adjusted 1.480 million for the week ended June 20 and although down from 1.540 million the prior week, it was higher than the 1.3 million a Reuters poll had expected.

Bank of England chief economist Andy Haldane, who argued against last week’s increase to the bank’s bond-buying programme, is due to speak about the future of society at 1700 GMT. The pound was up for a third day in four before that. The United States has added items valued at $3.1 billion to a list of European goods eligible to be hit with import duties.

The Trump administration has meanwhile determined that China’s Huawei and video surveillance company Hikvision are owned or controlled by the Chinese military, laying the groundwork for sanctions and new Sino-U.S. tension.

That stalled a rally in riskier currencies, and pushed the Australian dollar under 69 cents and left the kiwi stuck around 64 cents.

Gold prices edged higher on Thursday as a spike in coronavirus cases dented demand for riskier assets, although gains were capped by rival safe-haven buying of the dollar. Spot gold was up 0.1% at $1,763.29 per ounce as of 1309 GMT. U.S. gold futures eased 0.1% to $1,773.70. Gold hit its highest since October 2012 at $1,779.06 on Wednesday before settling 0.3% lower, breaking a 3-session winning streak. World stocks spluttered to their lowest in over a week after a surge in U.S. coronavirus cases and an IMF warning of a near 5% plunge in the global economy this year. While negativity in stock markets is propping up gold, “whenever we see these kind of movements, it does tend to favour the dollar,” said OANDA analyst Craig Erlam. The U.S. dollar held firm on Thursday as rising trade tensions coupled with fears of a second wave of coronavirus infections fuelled demand for the safe-haven currency. The surge in infections has kept investors on tenterhooks, with Australia and three U.S. states reporting a spike in cases as well as Brazil, Latin America and India, the world’s second biggest bullion consumer.

“The fact that gold has come under slight pressure nonetheless could be a sign of renewed forced selling to generate liquidity, as has often happened during phases of risk aversion in the past three months,” Commerzbank said in a note. “What is more, it is noticeable that falls in the gold price are still being viewed by investors as buying opportunities,” it said. “We therefore regard the latest weakness in the gold price as temporary and envisage new highs in the near future.” In other precious metals, palladium fell 1.2% to $1,841.62 per ounce, platinum was flat at $799.88 and silver rose 0.8% to $17.66.

Agencies