GLOBAL MARKETS-Asia shares firm as upbeat China data bucks the bears

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*Asian stock market:

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* Nikkei up, bad Japan GDP adds in terms of fiscal stimulus

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* China’s retail, industrial data beat forecasts

* Dollar based on higher yields, Fed bets

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* Oil prices extend pullback on risk of excess supply

SYDNEY, Nov 15 (Businesshala) – Asian shares rose on Monday as Chinese economic data surprised highs, challenging assumptions that the vast economy was locked in a recession, although a drop in mainland prices remained a looming concern. Remained.

Annual growth in retail sales and industrial output both beat forecasts, with a boom in consumption a positive given pandemic restrictions.

On a negative note for the stressed housing market, new home prices in China fell 0.2% month-on-month in October, the biggest drop since February 2015.

CBA economists argued there was a chance the People’s Bank of China would cut bank reserve requirements (RRRs) this week to support activity.

“We estimate that a 50 basis point reduction in RRR could lead to a liquidity release of CNY 1 billion,” he said in a note.

Chinese blue chips were a fraction lower after the data, while MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.3%.

Japan’s Nikkei rose 0.5%, as data showed more than expected shrinking economic activity in the third quarter only strengthened the case for an aggressive fiscal stimulus.

S&P 500 futures gained 0.1%, while Nasdaq futures rose 0.2%. The EUROSTOXX 50 futures and FTSE futures were both down 0.1%.

Elsewhere, the United Nations Climate Conference in Scotland managed to reach an agreement on emissions, but only by undermining the commitment to phase out coal.

Wall Street eased to break a string of gains last week, though major indices were only a shadow from all-time highs.

A major release this week will be US retail sales on Tuesday for any impact from a fall in consumer sentiment for November to a decade low, as people worried about higher prices, especially for petrol.

There are also doubts about whether firms have the pricing power to maintain margins in the face of rising costs.

Analysts at BofA noted that 75% of US companies had outpaced earnings estimates in the latest reporting season, but forecasts for the fourth quarter were only flat, breaking expectations for more than a year.

The grim survey helped hold Treasuries slightly stable, but yields were still up 11 basis points for the week as markets were at greater risk of a quick tightening by the Federal Reserve.

BofA economist Ethan Harris suspects that the market is still not priced high enough because higher initial levels of inflation mean further increases in rates are needed to reach neutral.

“If inflation remains high and comes above the planned overshoot, the Fed will need to become more rigid and either accept a market correction or intentionally induce such a correction,” Harris warned.

Higher US yields combined with general risk aversion to leverage the dollar, which has claimed its best week in nearly three months. Against a basket of currencies, the dollar was stable at 95.017 and was at its highest level since July 2020.

It was holding at 113.85 yen, preparing for another challenge to the October top at 114.69.

The euro looked weak at $1.1455, having turned a decisive low last week.

“The misdirected COVID infection curves are part of the reason, while new sanctions are being imposed in Austria and the Netherlands,” said Ray Attrill, head of FX strategy at NAB.

“Both the implications or growth on money markets and ECB policy are not being lost.”

European Central Bank President Christine Lagarde will appear before the European Parliament later on Monday.

Inflation concerns kept gold demand at $1,857 an ounce, after the biggest weekly gain since May.

Oil prices had a rough week, fueled by a strong dollar and speculation that President Joe Biden’s administration may release oil from the US Strategic Petroleum Reserve.

Brent on Monday reversed early gains, down 75 cents to $81.42 a barrel, while US crude fell 68 cents to $80.11.

Reporting by Wayne Cole; Editing by Sam Holmes


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