| Want the lowdown on what's moving European markets in your inbox every morning? Sign up here. Good morning. Stocks wake up with a hangover, infections pass 7.5 million and Brexit talks are to step up the pace. Here's what's moving markets. Correction All the signals were flashing and eventually they proved right: Stocks finally experienced a hefty correction. In Europe, stocks dropped the most in two months on Thursday as investors turned pessimistic on the virus's impact on the global economy.and futures are trending lower again this morning, with Asian equities having pared their drop and U.S. futures pointing to a rebound from the hit taken yesterday. The "stocks only go up" philosophy that's been pervasive in recent weeks got a $2 trillion refutation as the S&P 500 dropped nearly 6% and the Downtick Index on the New York Stock Exchange registered its lowest reading ever as nothing was spared. The pullback was seen by some as inevitable, since retail investors had rushed into the market to buy anything that moved, so now the question is whether it marks the start of a new trend or a blip for the gravity-defying rally. 7.5 Million Global Covid-19 infections surpassed the 7.5 million mark and there is growing concern about a resurgence in cases in some U.S. states that have started the process of reopening, though Treasury Secretary Steve Mnuchin said the country should not close down its economy again even if the number of cases does spike again. Houston is weighing a new shutdown as infections rise and President Donald Trump is asking attendees of his upcoming rallies to waive any liability should they contract the virus ahead of two events in Texas. In Europe, Italy confirmed that closed-door sporting events can restart on Friday, ahead of a number of soccer leagues returning over the course of the next week, and urged citizens to use a contact-tracing app to avoid a resurgence. In England, however, contact tracers failed to detect around a third of new cases in the first week of the system being in place. Capital Relief Europe's banks are close to securing capital relief on their sovereign debt holdings as lawmakers continue to work toward a package of measures to protect the industry from the pandemic fallout. European Union member states this week signed off on legislation that would offset the impact from losses on government bonds, according to a document seen by Bloomberg News. Europe's top official in charge of handling failing banks, Elke Koenig, warned against using taxpayer money to rescue zombie lenders that were on the brink of collapse before the virus hit. Banks are not the only nervous sector in Europe. Renault SA has warned the auto sector of the "ferocious competition" from Chinese electric cars while Spain's real estate sector is on the brink of its second crash in a decade. Stepping Up the Pace Having been mostly sidelined by the pandemic in recent months, Brexit talks are starting to move back into the limelight. The U.K. and the European Union are planning to step up the pace of the negotiations in an attempt to break the deadlock over the shape of their future relationship. Deal or no deal, the U.K. plans to introduce a temporary light-touch regime at its border with the EU to avoid piling burdens onto businesses already grappling with the effects of Covid-19. The U.K. is hoping the EU's chief negotiator, Michel Barnier, will be flexible on its so-far-rejected demands and the implications for U.K. monetary policy could be significant, with Morgan Stanley predicting that a hard Brexit and another wave of Covid-19 infections could put rates into negative territory. Coming Up… Along with downward-trending European futures, crude oil dropped the most in six weeks as the selloff in stocks raised more fears about the demand outlook, combined with record-high U.S. inventories. There are also warnings about a possible shake-up ahead in currencies as volatility rises, the euro's rally is showing fatigue and all the while gold continues to rise amid the turmoil around it. Euro-area industrial production data is due and it's a quiet Friday for earnings. In France, watch for any reaction to catering firm Sodexo SA dropping out of the CAC 40 Index following a quarterly review, where it will be replaced by call-center operator Teleperformance SA. What We've Been Reading This is what's caught our eye over the past 24 hours. And finally, here's what Cormac Mullen is interested in this morning Credit concerns haven't gone away, you know. Bubbling under the "what goes up must come down" feel to Thursday's rout on Wall Street, looks like a realization that optimism toward the easing financial pressure on U.S. corporates had gone too far. An equal-weighted basket of S&P 500 members with the lowest credit quality plunged 11%, more than double the 5% slump seen in the highest-rated shares, according to a Bloomberg measure based on factors including debt levels and cash flows. The sell-off nipped a nascent period of outperformance in the "junk" portfolio in the bud, bringing the gauge back into the narrow trading range against higher-quality peers it has occupied since late March. The move suggests equity investor concerns over the financial well-being of America's biggest companies have not disappeared, even as unprecedented liquidity measures from the Federal Reserve helped rein in a surge in borrowing costs. The Fed damped investor optimism this week when it suggested a full recovery from the Covid-19 pandemic will take years. Despite a near 90% surge in the basket of high-yield U.S. stocks from its March low, the portfolio remains down over 40% year-to-date. Its counterpart containing the highest-rated companies has risen almost 9% this year.  Cormac Mullen is a cross-asset reporter and editor for Bloomberg News in Tokyo Like Bloomberg's Five Things? Subscribe for unlimited access to trusted, data-based journalism in 120 countries around the world and gain expert analysis from exclusive daily newsletters, The Bloomberg Open and The Bloomberg Close. | 
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