(Bloomberg) — Stocks in Europe and Asia tumbled with U.S. equity futures on Thursday after the Federal Reserve painted a long slog ahead for the economic recovery and as coronavirus infection rates jumped in parts of America.

The Stoxx Europe 600 Index opened sharply lower, with sectors scooped up in the recent rally such as banks and travel leading declines. S&P 500 contracts sank after Fed Chairman Jerome Powell suggested the pandemic could inflict long-lasting damage on the economy. Treasuries continued higher while the dollar rebounded from Wednesday losses. The cautious mood coincided with concern of a fresh wave of the virus emerging as U.S. lockdowns ease.

Japanese and Australia benchmarks led a broad decline among Asia equity markets. Crude oil declined while gold held onto most of Wednesday’s gain.

Stocks are catching their breath after their fierce rally from March lows as investors weigh a rocky road to recovery from the pandemic against promised stimulus measures. U.S. cases now top 2 million, with fears of a second wave emerging in Texas and Florida. European policy makers meet today to decide whether to boost aid, while Treasury Secretary Steve Mnuchin said that the U.S. “definitely” needs additional fiscal stimulus, supporting prospects for another round this summer.

That comes as the Fed left its policy settings unchanged and pledged to keep buying bonds on Wednesday. Powell said the central bank had a briefing on yield-curve control, amid expectations from some economists that the Fed will follow Australia and Japan in adopting such a tool.

What to watch this week:

Euro-area finance ministers meet Thursday to discuss the EU’s recovery package and Eurogroup presidency succession.

These are some of the main moves in markets:


Futures on the S&P 500 Index sank 1.7{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811} as of 8:08 a.m. London time.The Stoxx Europe 600 Index sank 2.3{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811}.The MSCI Asia Pacific Index dipped 1.8{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811}.The MSCI Emerging Market Index dipped 1.1{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811}.


The Bloomberg Dollar Spot Index jumped 0.6{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811}.The euro declined 0.2{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811} to $1.1349.The British pound sank 0.7{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811} to $1.2661.The onshore yuan weakened 0.2{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811} to 7.075 per dollar.The Japanese yen strengthened 0.1{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811} to 107 per dollar.


The yield on 10-year Treasuries declined two basis points to 0.71{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811}.The yield on two-year Treasuries climbed one basis point to 0.17{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811}.Germany’s 10-year yield decreased four basis points to -0.38{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811}.Britain’s 10-year yield sank five basis points to 0.214{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811}.Japan’s 10-year yield dipped one basis point to 0.013{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811}.


West Texas Intermediate crude declined 4.1{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811} to $37.98 a barrel.Brent crude sank 3.6{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811} to $40.23 a barrel.Gold weakened 0.2{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811} to $1,735.10 an ounce.

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Stocks, Futures Slump on Fed Caution, Virus Fears: Markets Wrap