© Reuters. FILE PHOTO: A man wearing a protective mask following an outbreak of the coronavirus, talks on a mobile phone in front of a screen showing the Nikkei index outside a brokerage firm in Tokyo, Japan, May 26 2 2020. REUTERS / Athit Perawongmetha / File
By Wayne Cole
SYDNEY (Reuters) – Asian shares got off to a bad start Monday to a week with big US and China economic data and the launch of Apple’s latest iPhones (NASDAQ:), in when the phone faltered close to its last peak in 1990.
Hopes of fresh stimulus from a new prime minister in Japan saw the Nikkei rise 4.3% last week and hit a 30-year high on Friday, but the dizziness seems to have set in. on Monday when the Nikkei index slipped.
Reports that the US Democrats are considering proposals to raise taxes on corporations and the wealthy, while not exactly new, could create a cautious mood.
Adding to concerns about China’s regulatory crackdown is a report by the FT that Beijing is aiming to break up Alipay, the hugely popular payment app owned by Jack Ma’s Ant Group.
China released a flurry of data on retail sales, industrial output and urban investment on Wednesday that analysts fear will indicate a further slowdown in the world’s second-largest economy. .
MSCI’s broadest index of Asia-Pacific shares outside Japan lost 1.2%, after reversing a rally last Friday. China’s blue-chips fell 0.5% and most markets in the region were in the red.
Both Nasdaq and futures contracts were little changed, after starting profit-taking last week.
Wall Street experienced its worst period since February as doubts about the global economic recovery dented those who had reopened in the energy, hospitality and tourism sectors. .
Apple will be in the spotlight after slipping on Friday following an adverse court ruling regarding its app store, just days before announcing the new iPhone lineup.
Also featured are readings of US consumer prices on Tuesday, which are expected to see core inflation drop to 4.2%, while Thursday’s retail sales could show another drop as the spread of the Delta variant spooked shoppers.
The importance of the CPI was underlined by Philadelphia Fed President Patrick Harker, who told Nikkei he wants to start tapering off this year in case the inflation spike isn’t just temporary.
Harker advocates tapering down the scale over a period of 8 to 12 months, a longer period than some hawks have touted.
“Global markets are fixing the timing of QE cuts by central banks, especially the Fed,” said analysts at ANZ.
“That’s not surprising, given the support that additional liquidity has provided for stocks and assets in general,” they added. “The latest guidance from senior FOMC officials is that cuts are still very much on the agenda this year, but are unlikely to be announced until November.”
Tensions are only set to increase ahead of the next Fed meeting on September 21-22 and played a part in driving US 10-year yields to 1.38% last week. Yields ended up at 1.33% as stocks eased.
The overall risk aversion helped rally to 92,767 and off the recent lows of 91,941.
The euro fell back to $1.1788, from the September high of $1.1908 and below support at $1.1800. The dollar remained out of the yen at 109.99, having spent the whole month stuck in a very small range of 109.40-100.46.
Gold has also struggled to break higher and was last flat at $1,791 an ounce, after falling 2.1% last week when it failed to break through overhead resistance at $1.1830.
Oil prices steadied on Monday supported by growing signs of supply tightening in the United States in the aftermath of Hurricane Ida. About three-quarters of US Gulf offshore oil production has remained halted since the end of August. [O/R]
rose 34 cents to $73.26 a barrel, while up 31 cents to $70.03.
