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GLOBAL MARKETS-Asia shares anxious for earnings season, U.S. data deluge

Published 12/04/2021, 03:35 pm
Updated 12/04/2021, 03:36 pm
© Reuters.
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* Asian stock markets : https://tmsnrt.rs/2zpUAr4

* Stocks soften as U.S. earnings season kicks off

* Powell says U.S. economy at inflection point

* Strong data expected on U.S. inflation, retail sales

By Wayne Cole

SYDNEY, April 12 (Reuters) - Asian shares faltered on Monday as anxious investors wait to see if U.S. earnings can justify sky-high valuations, while a rally in bonds could be tested by what should be very strong readings for U.S. inflation and retail sales this week.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was off 1.1% in slow trade. Tokyo's Nikkei .N225 edged down 0.6%, while South Korean stocks .KS11 were near flat.

The Nifty 50 index .NSEI slid 2.4% as India overtook Brazil to become the country with the second most COVID-19 cases. blue chips .CSI300 lost 1.5% ahead of a rush of economic figures from the country.

Shares in Alibaba (NYSE:BABA) Group Holding Ltd 9988.HK BABA.N rose 16% after China slapped a record 18 billion yuan ($2.75 billion) fine on the e-commerce giant. Over a third of the stock is held by U.S. investors, and it makes up more than 8% of the MSCI EM index. since the Ant IPO was cancelled and with the antitrust laws in the pipeline, the market has expected that Alibaba would pay a price," said Louis Tse, managing director at Wealthy Securities in Hong Kong.

"I think it's good for the share price now that the news has been delivered and it is cleared up at last." futures NQc1 slipped 0.3% on Monday, as did S&P 500 futures ESc1 . EUROSTOXX 50 futures STXEc1 dithered either side of flat, while FTSE futures FFIc1 were down 0.3%.

Growth and tech stocks had seen something of a revival last week as U.S. 10-year Treasury yields retreated to 1.66% US10YT=TWEB , from a 14-month top of 1.776%.

Thomas Mathews, a markets economist at Capital Economics, doubted the rally in bonds would last, however.

"Given the pace of the economic recovery and the Fed's apparent unwillingness to stand in the way of higher yields, we think long-term yields will rise again before long," he said.

Over the weekend, Federal Reserve Chair Jerome Powell said the economy was about to start growing much more quickly, though the coronavirus remained a threat.

Data out this week are expected to show U.S. inflation jumped in March, while retail sales is seen surging perhaps even with a double-digit gain. Treasury is also set to test demand with offers of $100 billion in debt this week.

"Rapid economic growth, supported by reopening and accommodative fiscal policy, may disproportionately benefit the sectors of the stock market that are more sensitive to the health of the economy," said Mathews at Capital.

"And the composition of that growth is likely to be more skewed towards those sectors than it might have been during a typical economic expansion."

It is also likely to show in profits. The banks kick off first-quarter earnings season this week with Goldman Sachs (NYSE:GS) GS.N , JPMorgan (NYSE:JPM) JPM.N and Wells Fargo (NYSE:WFC) WFC.N scheduled to report on Wednesday.

Analysts expect profits for S&P 500 firms to show a 25% jump from a year earlier, according to Refinitiv IBES data. That would be the strongest performance for the quarter since 2018.

The pullback in yields was enough to see the dollar come off the boil last week. It was last trading at 92.265 =USD against a basket of currencies, down from a peak of 93.439.

It was flat on the yen at 109.60 JPY= , and short of its March peak of 110.96. The euro was holding at $1.1889 EUR= and above its recent trough of $1.1702.

Gold prices were idling at $1,737 an ounce XAU= , having failed to sustain a top of $1,758 last week. GOL/

Oil prices fell around 2% last week as production increases and renewed COVID-19 lockdowns in some countries offset optimism about a recovery in fuel demand. O/R

Brent LCOc1 was quoted up 3 cents on Monday at $62.98 a barrel, while U.S. crude CLc1 was flat at $59.32.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Asia stock markets

https://tmsnrt.rs/2zpUAr4 Asia-Pacific valuations

https://tmsnrt.rs/2Dr2BQA

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Editing by Shri Navaratnam and Ana Nicolaci da Costa)

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