SYDNEY (Reuters) – Asian equities eased early losses on Monday as data confirmed that the Chinese economy had recovered last quarter as factory production jumped, helping to partially offset the disappointing recent news about American consumer spending.
Chinese blue chips rose 0.8% after the economy was reported to grow 6.5% in the fourth quarter, a year earlier, beating forecasts by 6.1%.
December industrial production also exceeded estimates, although retail sales did not exceed the mark.
“Despite the recent decline in retail sales, we are seeing a big rise in consumption as households reduce the excess savings accumulated last year,” said Julian Evans-Pritchard, senior economist at Capital Economics in China.
“Meanwhile, last year’s stimulus winds should keep the industry and construction strong for a while longer.”
MSCI’s broader Asia-Pacific stock index outside of Japan reduced losses 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.
Future E-Minis for the S&P 500 fell 0.2%, though Wall Street will close on Monday for holidays. EUROSTOXX 50 futures decreased by 0.2% and FTSE futures by 0.1%.
The recovery in China was in stark contrast to the United States and Europe, where the spread of coronavirus has marked consumer spending, underscored by sad U.S. retail sales reported Friday.
Doubts are also evident as to how much of the stimulus package of U.S. President-elect Joe Biden will come through Republican opposition in Congress and the risk of further mafia violence at its inauguration Wednesday.
“The data calls into question the durability of the recent higher move in bond yields and rising inflation compensation,” ANZ analysts said in a note.
“There is a lot of good news around vaccines and stimulus with fixed equity prices, but optimism is being challenged by the reality of the tough months,” they warned. “The risk across Europe is that the blockades will be extended and US cases could increase sharply as the UK COVID variant spreads.”
This will focus on the earnings guidance of this week’s corporate results, which include BofA, Morgan Stanley, Goldman Sachs and Netflix.
Poor U.S. data helped the Treasury halt some of its recent strong losses and ten-year yields traded at 1.087%, below last week’s high of 1.187%.
At the same time, the more sober mood boosted the US dollar of safe haven, achieving a deeply short bear market. Speculators raised their short net position in dollars to the largest since May 2011, the week ended January 12th.
The dollar index was duly confirmed to 90,816 and was moving away from its recent low of 2-1 / 2 to 89,206.
The euro had retreated to $ 1.2074 from a January high of $ 1.2349, while the dollar remained stable at the yen at 103.78 and well above the recent low of 102.57. .
The Canadian dollar fell to $ 1,2773 per dollar after Reuters reported that Biden planned to revoke the permit for the Keystone XL pipeline.
Biden’s selection for Treasury Secretary Janet Yellen is expected to rule out the search for a weaker dollar when it declares Tuesday in Capital Hill, the Wall Street Journal reported.
Gold prices were undermined by the dollar rebound that left the metal at $ 1,828 an ounce, compared to its January high of $ 1,959.
Oil prices fell in profits, as the spread of narrower closures would hurt demand. [O/R]
Brent crude futures fell 52 cents to $ 54.58 a barrel, while U.S. crude fell 44 cents to $ 51.92.
Edited by Shri Navaratnam and Gerry Doyle