Financial markets around the world are waking up to the risks of another coronavirus flare-up.

Asian markets, blighted by rising cases from Japan to India, have underperformed their global peers since the start of March, just when they looked set to benefit from an acceleration in the global recovery. Currencies of nations stung by the virus have been underperforming those where vaccinations are surging ahead. And now the angst is starting to spread, with recovery trades under pressure and U.S. stocks sliding for two successive days.

“Markets that have become too comfortable with the re-opening trade and have loosened social restrictions can be in jeopardy with any Covid spike and variants,” said Paul Sandhu, head of multi-asset quant solutions Asia Pacific at BNP Paribas Asset Management. “Markets with high vaccination rates somewhat circumvent this downside risk.”

The World Health Organization said Tuesday that cases are rising in all regions except Europe, with the largest increase last week seen in Asia as India battles its biggest wave. Japan moved closer to declaring a virus emergency as infections spread in its two-biggest and economically important urban areas, Tokyo and Osaka, while health authorities in Toronto will order workplaces across Canada’s biggest city to close if they have more than five confirmed cases.

The MSCI AC World Index has fallen every day this week after closing at a record high last Friday. Investors are facing the latest wave of the virus with valuations significantly higher than they were before the pandemic.

The virus resurgence “might test global assets except those where vaccine rollouts are very advanced,” said Joshua Crabb, a senior money manager at Robeco in Hong Kong. “Clearly new strains are more virulent and may requires booster shots for those already vaccinated.”

On the currency front, investors have been seeking out havens like the Japanese yen and Swiss franc this week, and rewarding those with better track records of managing the outbreak such as the Israeli shekel and Taiwanese dollar. The Indian rupee has been the worst-performing currency in Asia as the new wave of infections threatens a nascent economic revival.

Stocks were set for their biggest decline in about a month in Asia Wednesday, with Japanese shares among the worst performers. U.S. stock futures were mixed as the rotation away from pandemic favorites gained ground.

“The virus resurgence in India and Japan appeared to be the main driver behind the selling in Asia-Pacific equities today,” said Margaret Yang, a strategist at DailyFX. “The reflation trade appears to have taken a pause, giving way to safe-havens and defensive names.”

With assistance from Garfield Reynolds, Ishika Mookerjee and Sid Verma.

This article was provided by Bloomberg News.