SYDNEY (Reuters) – Asian stock markets fled from highs on Monday as disappointing news about consumer spending sent U.S. sentiment ahead of a close reading of the health of China’s economy.
Doubts were also apparent about the amount of U.S. President Joe Biden’s stimulus package he will make through Congress because of Republican defiance, and the threat of more mob violence at his first visit Wednesday.
MSCI’s broadest index of Asia-Pacific shares outside Japan lost 0.3% after hitting a series of peaks in recent weeks. Japan’s Nikkei slipped 1% and away from a 30-year high.
E-Mini futures for the S&P 500 fell 0.3%, although Wall Street will be closed Monday for holidays.
Chinese GDP data is expected to show growth picked up to 6.1% last quarter, from 4.9% in the third quarter. Monthly figures on sales and business output should show rapid activity as the year ended.
“We expect Chinese GDP growth in Q4 to accelerate to a consensus above 6.5% per annum due to strong business output, recovery in services and strong exports,” said Joseph Capurso, head of economics at at the CBA.
“The data confirms that China’s economy came to an end this year.”
That would be very different from the U.S. and Europe where the spread of coronavirus has damaged consumer spending, confirmed by the U.S. false sales reported on Friday.
“The data raises questions about the stability of the recent trend of higher bond yields and the rise in inflation compensation,” analysts at ANZ said in a note.
“There is a lot of good news about vaccines and incentives being priced into equals, but there is hope in the next few months,” they said. “There is a Europe-wide risk of extended locks, and US issues could pick up suddenly as the UK COVID variable spreads.”
That will shift the focus to earnings management from this week’s corporate results, which include BofA, Morgan Stanley, Goldman Sachs and Netflix.
Bad U.S. Treasury data helped off some of their recent steep losses and 10-year yields traded at 1.087%, down from a peak of 1.187% last week.
The calmer sentiment then led to a rise in the safe US dollar, capturing a very short bearish market. Speculators increased the net short dollar position to its highest level since May 2011 in the week ending January 12th.
The dollar index rose to 90.837, and away from the recent 2-1 / 2 year pool at 89.206.
The euro had bounced back to $ 1.2068, from its January high of $ 1.2349, while the dollar remained stable on the yen at 103.93 and well above the recent low of 102.57.
Biden’s election for Treasury Secretary Janet Yellen is expected to refuse to seek a weaker dollar when he tests Capital Hill on Tuesday, the Wall Street Journal reported.
Gold prices weakened by the kick-off of the dollar leaving the metal down at $ 1,812 an ounce, compared to its January peak of $ 1,959.
Oil prices plummeted to take advantage amid the spread of increasingly tight locks around the globe destroying demand.
Brent crude futures went off 12 cents at $ 54.98 a barrel, while U.S. crude grew 11 cents to $ 52.25.
Edited by Shri Navaratnam