LONDON (Reuters) – Global stock markets faltered on Monday as rising COVID-19 cases dropped investors’ hopes of a rapid economic recovery, even after data showed the Chinese economy recovered faster in the fourth quarter of 2020 has than expected.
European equities, as measured by the STOXX 600 index, struggled to give direction, last trading at 0.1% from 1446 GMT, after failed merger talks between French retailer Carrefour and Alimentation Couche-Tard dragged down the bar. The continent’s 50 largest shares fell 0.2% [.EU]
In Asia, Chinese blue chips rose 1.1% after the economy grew by 6.5% in the fourth quarter, up from a year earlier, which was 6.1% higher.
Industrial production for December is also beating estimates, although retail sales have missed expectations.
“The recovery in local demand is still lacking solid support,” said BEE fixed-income and FX strategist at BEE. “Sporadic virus outbreaks have increased the risk in the short term.”
China has reported more than 100 new COVID-19 cases for the sixth consecutive day, with increasing infections in the northeast sparking concern of another wave as hundreds of millions of people travel for the Moon New Year holiday.
Tough new controls in the city of Gongzhuling in Jilin Province, with a population of about 1 million people, bring the total number of people under lock and key to more than 29 million.
Hallika said the impact of the latest regional barriers and mass tests would likely be limited and short-lived.
The economic growth in China was a clear contrast to the United States and Europe, where the spread of coronavirus hit consumer spending, underlined by the dismal U.S. retail sales reported Friday.
Weak U.S. consumer spending last week helped the Treasury compare their recent strong losses and ten-year returns traded at 1,097%, up from 1,187%.
The more sober state of mind has in turn boosted the safe haven US dollar and a bearish market very short. Speculators increased their net short dollar position to the largest since May 2011 in the week ended January 12th.
There are also doubts about how much of President-elect Joe Biden’s stimulus package will get the Republican opposition through Congress, and the risk of more violence during his inauguration Wednesday.
BUBBLE?
Elsewhere, in Asian markets, the Japanese Nikkei has slipped by 1% and away from a 30-year high.
MSCI’s All Country World Index, which tracks equities in 49 countries, traded 0.05% lower, lower for a second session after hitting a record high just last week.
E-Mini futures contracts for the S&P 500 trade, although Wall Street will be closed for a holiday on Monday.
Recent price actions in markets have prompted investors to discuss whether asset markets could be overvalued.
Mark Haefele, chief investment officer of UBS Global Wealth Management, said in a monthly letter to clients last week that all the conditions for a bubble exist.
“Financing costs are at their lowest level, new entrants are being attracted to markets, and the combination of high accumulated savings and low prospective returns on traditional assets creates both the means and the desire to engage in speculative activities,” he said.
He warned that in the coming months, investors should pay particular attention to ‘the risks of a reversal of monetary policy, rising stock valuations and the pace of recovery after the pandemic’.
Haefele said, however, that the broader stock market was not in a bubble, although he saw speculation.
Cryptocurrency bitcoin traded 1.6% and reached $ 36,393.
The dollar index fell 0.06% to 90,818, the strongest since December 21, and away from the recent 2-1 / 2-year low of 89,206.
The euro traded at $ 1.2072, down to its lowest level since December 2, while the dollar rose 0.15% against the yen at 103.73 and well above the recent low of 102.57.
The European Central Bank will face more questions this week about an increasingly challenging outlook just a month after unleashing new stimulus to strengthen the eurozone economy.
The Canadian dollar fell to $ 1.2792 per dollar after Reuters reported Biden planned to revoke the permit for the Keystone XL oil pipeline.
Biden’s choice for Treasury Secretary Janet Yellen is expected to rule out a weaker dollar when he testifies Tuesday, the Wall Street Journal reported.
Gold prices rose 0.3% to $ 1,833 per ounce compared to the January high of $ 1,959.
The price of crude oil has become lucrative over concerns that the proliferation of increasing connections worldwide would hurt demand, a decline that also sent the Russian ruble down 1.1%.
Brent crude futures fell 0.1% at $ 55.03 a barrel, while U.S. crude traded flat at $ 52.34.
Reporting by Ritvik Carvalho; additional reporting by Wayne Cole in Sydney; Edited by Angus MacSwan, Hugh Lawson and Alison Williams