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© Reuters.
By Wayne Cole
SYDNEY (Reuters) – Asian stock markets fell back from highs on Monday as disappointing news on US consumer spending dampened risk sentiment ahead of a close read on the health of the Chinese economy.
Doubts were also evident about how much of the US President-elect Joe Biden’s stimulus package will go through Congress given Republican opposition and the risk of more mob violence at his inauguration on Wednesday.
MSCI’s broader Asia-Pacific equity index outside of Japan lost 0.3% after hitting a series of record highs in recent weeks. it fell 1% and fell away from a 30-year high.
E-Mini futures fell 0.3%, although Wall Street will be closed on Monday for a holiday.
Chinese GDP data is expected to show growth rebounding to 6.1% annually in the latest quarter, from 4.9% in the third quarter. Monthly figures for retail sales and industrial production should show dynamic activity at the end of the year.
“We expect Q4 Chinese GDP growth to accelerate to 6.5% annually above consensus due to robust industrial production, recovery of services and strong exports,” said Joseph Capurso, head of international economics. by CBA.
“The data will confirm that the Chinese economy ended the year on a solid footing.”
That would be a stark contrast to the US and Europe, where the spread of the coronavirus has marked consumer spending, underscored by dismal US retail sales reported on Friday.
“The data casts doubt on the durability of the recent upward movement in bond yields and the increase in inflation compensation,” ANZ analysts said in a note.
“There is a lot of good news around vaccines and stimulus prices on stocks, but optimism is being challenged by the reality of the difficult months ahead,” they warned. “The risk across Europe is that lockdowns will spread and cases in the US could increase dramatically as the UK variant of COVID spreads.”
That will put the focus on this week’s corporate earnings guidance, which includes BofA, Morgan stanley (NYSE :), Goldman Sachs (NYSE 🙂 and Netflix (NASDAQ :).
Poor US data helped Treasuries cut some of their recent heavy losses and 10-year yields were trading at 1,087%, down from last week’s high of 1,187%.
The more sober mood, in turn, propelled the safe-haven US dollar, catching a deeply short bear market. Speculators increased their net short dollar position to the highest since May 2011 in the week ending January 12.
He duly rebounded to 90,837, and moved away from its recent two-and-a-half-year low at 89,206.
The euro had retreated to $ 1.2068 from its January high of $ 1.2349, while the dollar was stable against the yen at 103.93 and well above the recent low of 102.57.
Biden’s pick for Treasury Secretary Janet Yellen is expected to rule out seeking a weaker dollar when he testifies at Capital Hill on Tuesday, the Wall Street Journal reported.
Gold prices were affected by the rebound in the dollar, which left the metal at $ 1,812 an ounce, compared with its January high of $ 1,959.
Oil prices faced profit-taking on concerns that the spread of increasingly stringent closures globally would hurt demand.
futures were down 12 cents to $ 54.98 a barrel, while they were down 11 cents to $ 52.25.
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