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* Asian scholarships: tmsnrt.rs/2zpUAr4
* Nikkei off 1%, trade cleared by US vacations
* Look at Chinese GDP data for the economic outlook
* US dollar, Treasuries post gains as risk appetite wanes
SYDNEY, Jan.18 (Reuters) – Asian stock markets retreated from their highs on Monday as disappointing news on U.S. consumer spending tempered risk sentiment ahead of a closely watched reading on the health of the U.S. Chinese economy.
There were also doubts about how much of US President-elect Joe Biden’s stimulus package will pass through Congress given Republican opposition and the risk of more grassroots violence when he takes office on Wednesday.
The largest MSCI index of Asia-Pacific stocks outside of Japan fell 0.3% after hitting a series of record highs in recent weeks. Japan’s Nikkei slipped 1% and moved away from a 30-year high.
E-Mini futures for the S&P 500 fell 0.3%, although Wall Street was closed for a holiday on Monday.
Chinese GDP data is expected to show growth increased to 6.1% per year in the last quarter, down from 4.9% in the third quarter. Monthly retail sales and industrial production figures should show sustained activity at the end of the year.
“We expect Chinese GDP growth to accelerate in the fourth quarter to above the consensus level of 6.5% per year due to robust industrial production, recovery in services and strong exports,” he said. said Joseph Capurso, head of international economics at CBA.
“The data will confirm that the Chinese economy ended the year on a solid footing.”
That would be in stark contrast to the United States and Europe where the spread of the coronavirus has marked consumer spending, underscored by dismal US retail sales reported on Friday.
“The data calls into question the sustainability of the recent rise in bond yields and the rise in inflation compensation,” ANZ analysts said in a note.
“There is a lot of good news about vaccines and stimulus built into the stock, but optimism is challenged by the reality of the tough months ahead,” they warned. “The risk across Europe is that lockdowns will be extended, and US cases could increase dramatically as the UK variant COVID spreads.”
This will focus on earnings forecasts from the earnings of companies this week, which include BofA, Morgan Stanley, Goldman Sachs and Netflix.
Bad US data helped Treasuries reduce some of their recent steep losses, and 10-year yields were trading at 1.087%, down from last week’s high of 1.187%.
The more subdued mood in turn boosted the safe haven US dollar, catching up with a deeply short bear market. Speculators increased their net short dollar position to the highest since May 2011 during the week ended January 12.
The dollar index has duly rallied to 90.837, and away from its recent 2 1/2 year low at 89.206.
The euro had retreated to $ 1.2068, from its January high of $ 1.2349, while the dollar was flat against the yen at 103.93 and well above the recent low of 102.57 .
Biden’s choice for Treasury Secretary Janet Yellen is expected to rule out a search for a weaker dollar during his testimony in Capital Hill on Tuesday, the Wall Street Journal reported.
Gold prices were undermined by the dollar rebound, leaving the metal at $ 1,812 an ounce, from its January high of $ 1,959.
Oil prices have collided with profit taking on fears that the spread of increasingly tight restrictions globally will hurt demand.
Brent futures fell 12 cents to $ 54.98 a barrel, while US crude fell 11 cents to $ 52.25.
Edited by Shri Navaratnam
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