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© Reuters. FILE PHOTO: Pedestrians wearing face masks reflect on an electrical panel showing stock prices outside a brokerage house in a Tokyo business district
By Wayne Cole
SYDNEY (Reuters) – Asian stock markets paused on Monday as reports of a possible tightening of emergency coronavirus rules in Tokyo pulled Japanese stocks off their 30-year highs, while raising the yen, a safe haven.
Investors still rely on central banks to keep money very cheap as the rollout of coronavirus vaccines helps kick-start the global economy over time, but much of that optimism is already built in and the virus does not cooperate.
slumped its first gains 1.1% when Fuji TV reported that the government was considering a state of emergency for the capital Tokyo and three surrounding prefectures.
The MSCI’s largest Asia-Pacific stock index outside of Japan edged up 0.1%, a trickle after a record high.
Futures on E-Mini fell 0.2% after hitting a new all-time high in early trading.
Investors are cautiously watching Georgia’s runoff election for two US Senate seats on Tuesday, which will determine which party controls the Senate.
If Republicans win one or both, they will retain a slim majority in the chamber and may block the legislative goals of President-elect Joe Biden and the presidential candidates.
“If Democrats won both races, Vice President-elect Kamala Harris would be the deciding vote, giving the party unified control of the White House and Congress,” ABC analysts noted.
“It would increase the likelihood that a major US infrastructure spending package would be accelerated by Congress.”
The minutes of the Federal Reserve’s December meeting scheduled for Wednesday are expected to provide more details on discussions to make their future policy directions more explicit and the possibility of a further increase in asset purchases this year.
The data schedule includes a series of manufacturing surveys around the world, which will show how the industry is coping with the spread of the coronavirus, and the closely watched ISM surveys of U.S. factories and services.
A survey showed that Japanese industrial activity stabilized for the first time in two years in December, while activity in Taiwan resumed.
Friday sees the December US payroll report where the median forecast is for only a modest increase of 100,000.
Analysts like Barclays (LON 🙂 rocks a drop of 50,000 jobs, which would be a shock to the market’s hopes of a rapid recovery.
“A number of inbound activity indicators point to a slowdown in momentum at the end of the year, including data from labor markets where initial demands increased during the December survey period.” , said economist Michael Gapen in a note.
Such a drop would add pressure on the Fed to ease further, another burden on the dollar which is already sagging under the weight of the massive US budget and trade deficits.
The latest was at 89.786, not far from its recent 2-1 / 2-year low of 89.515 after losing almost 7% in 2020.
The euro edged up to $ 1.2245, after recording profit taking late last week, when it hit its highest level since early 2018 at $ 1.2309. It gained almost 9% in 2020.
The dollar slipped to 103.02 yen and looked threatened to test key support at 102.55. The British Pound was firm at $ 1.3674, a few steps from its recent high of $ 0.13686.
The weaker dollar provided support for gold, leaving the metal 0.6% firmer at $ 1,910 an ounce.
Oil prices have stabilized after a few months of solid gains, with Brent meeting resistance around $ 52.50 a barrel. The rebound still left Brent down 21.5% for the year and WTI down 20.5%.
On Monday, futures fell 8 cents to $ 51.72, while easing 12 cents to $ 48.40 a barrel.
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