By Joanne Chiu 

International markets were subdued, following gains in the U.S., as investors assessed the pace of economic reopening.

In Thursday-morning trading in Hong Kong, the city's Hang Seng Index retreated slightly, as did the Shanghai Composite. The S&P/ASX 200 benchmark in Australia advanced more than 0.5%, while indexes in Japan and South Korea edged up.

E-mini S&P 500 futures fell 0.4%, suggesting U.S. stocks could retreat Thursday.

Alex Wong, a director at hedge fund Ample Capital, said he has turned cautious following recent stock rallies, given the uncertain pace of the global economic revival.

"There's a disconnect between equities and the economic fundamentals," Mr. Wong said. "Many investors are looking beyond short-term realities and banking on hopes of an economic recovery in 2021 as global economies gradually reopen," he said.

Mr. Wong said he was holding more cash after gradually reducing holdings in some richly valued new-economy stocks.

Rob Mumford, an investment manager for emerging-market equities at GAM Investments, said stocks had been buoyed by huge amounts of official stimulus and optimism over resumption of business activity. However, he said new clusters of coronavirus infections and containment measures would weigh on corporate earnings and economic activity.

Given that, Mr. Mumford said, "We expect quite a choppy trading pattern over the summer." He said stocks that had been slower to recover, and those in industries that are more exposed to economic cycles, would continue to play catch-up with better-performing sectors of the market.

Mr. Mumford said his fund has since last month rotated some investment out of markets in North Asia and some highly valued sectors such as technology into emerging markets including Brazil, the Philippines and Indonesia.

Emerging-market investments tend to perform better when the dollar is weaker. Mr. Mumford said that if the U.S. recovery lags behind the rebound in other regions, that would tend to keep the dollar weak.

The WSJ Dollar Index, which measures the U.S. currency against 16 others, spiked in March and has pulled back in recent weeks. It rose slightly on Thursday to 91.63.

U.S. stocks rose on Wednesday as social unrest across the U.S. showed signs of calming and investors bet economic activity would improve with the ebbing of coronavirus infections and additional government stimulus.

On Thursday morning in Hong Kong, global oil prices retreated. West Texas Intermediate, the main U.S. crude gauge, fell 1.8% to $36.62 a barrel. Brent crude, the global oil benchmark, retreated 1.2% to $39.33 a barrel.

The pullback came after a Saudi-Russian deal to extend production cuts on Wednesday helped boost U.S. crude to its highest since early March and briefly pushed Brent crude above $40 a barrel for the first time in about three months.

Write to Joanne Chiu at joanne.chiu@wsj.com

(END) Dow Jones Newswires

June 04, 2020 01:24 ET (05:24 GMT)

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