SYDNEY (Reuters) – Asian equities eased early losses on Monday as data confirmed China’s economy rebounded in the last quarter, while factory output rose, partly helping offset disappointing recent news of US consumer spending.
Chinese blue chips gained 0.8% after the economy reported a 6.5% increase in the fourth quarter compared to a year earlier, exceeding 6.1%.
Industrial production in December exceeded estimates, although retail sales failed.
“Despite the recent decline in retail sales, we see a large increase in consumption as households save the excess savings accumulated last year,” said Julian Evans-Pritchard, senior economist in China at Capital Economics.
“Meanwhile, the winds behind last year’s stimulus should keep the industry and construction strong for a longer period of time.”
The broadest MSCI index of Asia-Pacific equities outside Japan fell and fell 0.3% after hitting a record high in recent weeks. The Japanese Nikkei fell 0.8% and moved away from the 30-year high.
E-Mini futures for the S&P 500 fell 0.2%, although Wall Street will be closed on Monday for a holiday. EUROSTOXX 50 futures decreased by 0.2% and FTSE futures by 0.1%.
The resumption in China was in stark contrast to the US and Europe, where the spread of the coronavirus affected consumer spending, underlined by US retail sales reported on Friday.
Doubts are also evident about how much of President-elect Joe Biden’s stimulus package will go through Congress, given the Republican opposition, and the risk of more mafia violence at its inauguration on Wednesday.
“The data calls into question the sustainability of the recent larger bond yield move and rising inflation offsets,” ANZ analysts said in a statement.
“There is a lot of good news about vaccines and stock price incentives, but optimism is called into question by the painful reality of the next few months,” they warned. “The risk across Europe is that the blockades will be extended, and cases in the US could suddenly increase as the COVID version in the UK expands.”
It will focus on targeting earnings from corporate results this week, which includes BofA, Morgan Stanley, Goldman Sachs and Netflix.
Weak US data helped the Treasury reduce some of its recent steep losses, and 10-year yields traded at 1.087%, down from last week’s peak of 1.187%.
The more sober mood, in turn, stimulated the US dollar safe haven, catching a deeply short rising market. Speculators increased their net position in short dollars to the highest since May 2011 in the week ending January 12.
The dollar index was properly confirmed at 90,816 and is far from its last year of 2-1 / 2 at 89,206.
The euro retreated to $ 1.2074 from its January high of $ 1.2349, while the dollar remained steady on the yen at 103.78 and well above its most recent low at 102.57.
The Canadian dollar fell to $ 1.2773 per dollar after Reuters reported that Biden was planning to revoke the license for the Keystone XL oil pipeline.
Biden’s election for Treasury Secretary Janet Yellen is expected to rule out a weaker dollar when he testifies on Capital Hill on Tuesday, the Wall Street Journal reported.
Gold prices were undermined by the return of the dollar, leaving the metal at $ 1,828 an ounce, compared to its January peak of $ 1,959.
Oil prices have faced profit concerns, the spread of increasingly tight bottlenecks globally would affect demand. [O/R]
In the long run, Brent crude oil fell 52 cents to $ 54.58 a barrel, while US crude oil fell 44 cents to $ 51.92.
Editing by Shri Navaratnam and Gerry Doyle