SYDNEY (Reuters) – Asian equity markets trimmed their initial losses on Monday as data confirmed that the Chinese economy rebounded last quarter with increased factory production, helping to offset recent disappointing news on consumer spending. US consumers.
China’s blue chips were up 0.4% after the economy grew 6.5% in the fourth quarter from a year earlier, beating forecasts by 6.1%.
Industrial production for December also beat estimates, although retail sales did not hit the target.
MSCI’s broader index of Asia Pacific equities outside of Japan trimmed losses and lost 0.2%, after reaching a series of record highs in recent weeks. Japan’s Nikkei slid 0.8% from a maximum of 30 years.
E-Mini futures for the S&P 500 fell 0.3%, although Wall Street will be closed on Monday for a holiday. EUROSTOXX 50 futures fell 0.2% and FTSE futures 0.1%.
The recovery in China was in stark contrast to the US and Europe, where the spread of the coronavirus marked consumer spending, underscored by poor US retail sales reported on Friday.
Doubts are also clear about how much of US President-elect Joe Biden’s stimulus package will be able to outrun Congress given Republican opposition and the risk of further mass violence at its inauguration Wednesday.
“The data calls into question the duration of the recent rise in bond yields and the rise in inflation compensation,” ANZ analysts said in a statement.
“There is a lot of good news about vaccines and valued stock stimuli, but the optimism is challenged by the reality of the difficult months ahead,” they warned. “The risk across Europe is that blockages will be extended and US cases could increase dramatically as the COVID variant spreads to the UK.”
This will put the emphasis on profit driving from this week’s corporate results, which include BofA, Morgan Stanley, Goldman Sachs and Netflix.
Poor US data helped Treasuries cut some of their recent heavy losses and 10-year yields traded 1.087%, down from last week’s high of 1.187%.
The more sober mood, in turn, strengthened the safe haven US dollar, capturing a deeply short bear market. Speculators increased their net short position on the dollar to the highest since May 2011 in the week ending 12 January.
The dollar index duly stabilized at 90.786, and on from its 2-1 / 2 year low minimum at 89,206.
The euro had retreated to $ 1,2074, from its January peak at $ 1.2349, while the dollar remained stable against the yen at 103.80 and well above the recent low of 102.57.
The Canadian dollar fell to $ 1.2773 per dollar after Reuters reported Biden planned to revoke the permit for the Keystone XL pipeline.
Biden’s choice for Treasury Secretary Janet Yellen should rule out looking for a weaker dollar during the Capital Hill testimony on Tuesday, the Wall Street Journal reported.
Gold prices were undermined by a rebound in the dollar which left the metal at $ 1,824 an ounce from its January high of $ 1,959.
Oil prices took profits on concerns that the spread of tightening global locks would hurt demand. [O/R]
Brent crude futures fell from 52 cents to $ 54.58 a barrel, while US crude fell 46 cents to $ 51.90.
Editing by Shri Navaratnam and Gerry Doyle