SYDNEY (Reuters) – Asian shares made a poor start on Monday to a week packed with major U.S. and Chinese economic data and the launch of Apple’s latest iPhones, while the Nikkei faltered tantalisingly close to heights last visited in 1990.
Hopes for fresh stimulus from a new prime minister in Japan saw the Nikkei surge 4.3% last week, and Topix made those 30-year highs on Friday, but vertigo appeared to set on Monday as the Nikkei slipped.
Reports that U.S. Democrats were considering proposals to raise taxes on corporations and the wealthy, while not exactly new, could make for a cautious mood.
Adding to concerns about China’s regulatory crackdown was an FT report that Beijing is aiming to break up Alipay, the hugely popular payments app owned by Jack Ma’s Ant Group.
China releases a swath of data on retail sales, industrial output and urban investment on Wednesday that analysts fear will show a further slowdown in the world’s second-biggest economy.
MSCI’s broadest index of Asia-Pacific shares outside Japan lost 1.2%, to more than reverse a rally last Friday. Chinese blue chips were off 0.5% and most markets in the region were modestly in the red.
Both Nasdaq futures and S&P 500 futures were little changed, after running into profit taking last week.
Wall Street suffered its worst run since February as doubts about the resilience of the global economic recovery hurt former reopening darlings in energy, hotels and travel.
Apple will be a focus after sliding on Friday following an unfavourable court ruling related to its app store, just days before it unveils the new iPhone line up.
Also highlighting are readings on U.S. consumer prices on Tuesday, which is expected to see core inflation ease a touch to 4.2%, while retail sales on Thursday could show another decline as the spread of the Delta variant spooks shoppers.
The importance of the CPI was underlined by Philadelphia Fed President Patrick Harker who told the Nikkei he wanted to start tapering this year just in case the spike in inflation proved more than transitory.
Harker favoured scaling the tapering down over an 8 to 12 month period, which is longer than some hawks have touted.
“Global markets are fixated on the timing of tapering of QE by central banks, particularly the Fed,” said analysts at ANZ in a note.
“That’s unsurprising, given the support that the extra liquidity has provided to equities and assets more generally,” they added. “The latest guidance from senior FOMC officials is that tapering is still very much on the agenda this year, but is unlikely to be announced until November.”
The tension is only set to mount ahead of the Fed’s next meeting on Sept. 21-22, and played a part in nudging U.S. 10-year yields up toward a major chart bulwark around 1.38% last week. Yields were last at 1.33% as stocks eased.
The general air of risk aversion helped lift the dollar index to 92.767 and off the recent low of 91.941.
The euro has faded back to $1.1788, from the September top of $1.1908 and under support at $1.1800. The dollar remains sidelined on the yen at 109.99, having spent an entire month trapped in a tiny range of 109.40-100.46.
Gold has also had trouble breaking higher and was last flat at $1,791 an ounce, after shedding 2.1% last week when it repeatedly failed to clear resistance above $1,1830.
Oil prices firmed on Monday supported by growing signs of supply tightness in the United States as a result of Hurricane Ida. About three-quarters of the U.S. Gulf’s offshore oil production has remained halted since late August. [O/R]
Brent added 34 cents to $73.26 a barrel, while U.S. crude rose 31 cents to $70.03.
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