GLOBAL MARKETS-Shares climb on China's economic recovery, with earnings in focus

GLOBAL MARKETS-Shares climb on China's economic recovery, with earnings in focus

Reuters  | Jan 19, 2021 14:20

GLOBAL MARKETS-Shares climb on China's economic recovery, with earnings in focus

* Asian stock markets :
* Nikkei bounces, S&P 500 futures steady from pullback
* Bulls hope for positive news on corporate earnings
* Caution ahead of Biden inauguration, stimulus proposals

By Wayne Cole and Julie Zhu
SYDNEY/HONG KONG, Jan 19 (Reuters) - Asian shares climbed on
Tuesday as investors wagered China's economic strength would
help underpin growth in the region, even as pandemic lockdowns
threatened to lengthen the road to recovery in the West.
Data out on Monday had confirmed the world's second-largest
economy was one of the few to grow over 2020 and actually picked
up speed as the year closed. European markets appeared set for a higher open with Euro
Stoxx 50 futures STXEc1 up 0.5% and London's FTSE FFIc1
gaining 0.4%. Those of Germany's DAX FDXc1 rose 0.64%.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS firmed 1.61%, to be a whisker from record highs.
Japan's Nikkei .N225 bounced 1.53%, recovering all the
losses suffered on Monday when caution had dominated markets.
Australian shares .AXJO climbed 1.19% as investors bet on
news that Queensland state was set to lift virus-led
restrictions and on prospects of better production numbers from
local miners. Chinese blue-chips dipped 1.47%, while Hong Kong's Hang Seng
.HIS advanced 2.1%, helped by steady and robust demand from
investors in mainland China for shares in the Asian financial
Mainland investors purchased 18.9 billion yuan ($2.91
billion) worth of Hong Kong stocks on Tuesday via the Stock
Connect linking mainland and Hong Kong, after spending a record
HK$23 billion on Monday, according to HKEX and Refinitiv
data. L4N2JU11A
On Wall Street, U.S. stocks also looked a little steadier as
futures for the S&P 500 ESc1 added 0.67% and NASDAQ futures
NQc1 0.97%.
Analysts at JPMorgan felt the coming earnings season could
brighten the mood given the consensus in Europe was for a fall
of 25% year-on-year, setting a very low bar.
"The projected EPS growth in Europe now stands at the lows
of the crisis which seems too conservative, and could likely
lead to positive surprises over the reporting season," they
wrote in a note.
The same could be true for the United States where results
from BofA, Morgan Stanley, Goldman Sachs and Netflix are due
this week.
For now, dealers were cautious ahead of U.S. President-elect
Joe Biden's inauguration given the risk of more mob violence,
along with doubts about how much of his fiscal stimulus package
will pass Republican opposition in Congress.
Janet Yellen, Biden's nominee to run the Treasury
Department, will tell the Senate Finance Committee on Tuesday
that the government must "act big" with the coronavirus relief
plan. "Biden will not want the risk of a double-dip recession to
escalate," said analysts at ANZ in a note.
The full $1.9 trillion proposal combined with stimulus
already agreed would amount to 10% of GDP.
"That would be sufficient to close any output gap and
underpin a gradual recovery in inflation as demand firms," they
wrote. "But it will be a difficult winter, and investors will
need renewed confidence in the inflation trade before
established earlier trends reassert themselves."
Wall Street is also bracing for tougher regulations now that
the Democrats control the Senate, with Biden set to nominate two
consumer champions to top financial agencies. In bond markets, 10-year Treasury yields US10YT=RR were
steady at 1.11% and off their recent 10-month high of 1.187% as
investors waited to see how much fiscal stimulus might actually
get passed.
Currencies were also quiet with the dollar index last at
90.764 =USD , comfortably above its recent trough of 89.206.
The euro idled at $1.2093 EUR= , after touching a six-week
low of $1.2052 overnight, while the dollar was sidelined on the
safe-haven yen at 104.02 JPY= .
The Canadian dollar eased to $1.2729 CAD= on reports Biden
would cancel a permit for the Keystone XL pipeline as one of his
first acts in office. Gold steadied at $1,838 an ounce XAU= after briefly
reaching a six-week low of $1,809.90 overnight. GOL/
Global demand concerns kept oil prices in check. U.S. crude
CLc1 fell 0.19% to $52.26 a barrel, while Brent crude LCOc1
futures rose 0.44% to $54.99 a barrel. O/R

Asia stock markets
Asia-Pacific valuations
(Editing by Lincoln Feast and Ana Nicolaci da Costa)

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