© Reuters. ARCHIVE PHOTO: pedestrians wearing face masks are reflected on an electrical board that shows stock prices outside a brokerage in a business district in Tokyo
By Wayne Cole
SYDNEY (Reuters) – Asian stock markets paused on Monday with reports of a possible tightening of the coronavirus emergency rules for Tokyo, pushing Japanese stocks out of their 30-year highs, while also raising the yen, safe harbor.
Investors are still counting on central banks to keep their money super cheap while the launch of coronavirus vaccines helps revive the global economy over time, but much of that optimism is already seized and the virus is not cooperating.
reduced its initial earnings to drop 1.1% when Fuji TV reported that the government was considering a state of emergency for the capital Tokyo and three neighboring city governments.
MSCI’s broadest Asia-Pacific stock index outside Japan rose 0.1%, a mustache from a record high.
E-Mini futures fell 0.2% after reaching a new historic top at the start of trading.
Investors are watching carefully the second round of the Georgia election for two seats in the U.S. Senate on Tuesday, which will determine which party controls the Senate.
If Republicans win one or both, they will retain a small majority in the House and can block President-elect Joe Biden’s legislative objectives and judicial nominees.
“If Democrats win both contests, Vice President-elect Kamala Harris will have the casting vote, giving the party unified control of the White House and Congress,” noted CBA analysts.
“This would increase the likelihood that a US infrastructure spending package will be quickly tracked by Congress.”
The minutes of the Federal Reserve meeting in December, scheduled for Wednesday, are expected to provide more details on discussions on how to make its future policy guidance more explicit and the chance of a further increase in asset purchases this year.
The data calendar includes a series of manufacturing surveys around the world, which will show how the industry is dealing with the spread of the coronavirus, and the ISM surveys observed closely at US factories and services.
A survey showed that Japan’s manufacturing activity stabilized for the first time in two years in December, while activity in Taiwan increased.
Friday sees the US December payroll report, where average forecasts are only a modest 100,000 increase.
Analysts like Barclays (LON 🙂 point to a drop of 50,000 jobs, which would be a shock to the market’s hopes for a quick recovery.
“A series of activity indicators point to a slower pace with the close of the year’s economy, including data on labor markets, where initial claims increased during the December survey period,” said economist Michael Gapen in one note.
Such a drop would increase pressure on the Fed to ease even more, another burden on the dollar that is already doubling under the weight of the huge US budget and trade deficits.
The latest was at 89,786, not far from its recent 89,515 low in 2-1 / 2 years, having dropped by almost 7% in 2020.
The euro advanced to $ 1.2245, reaching profit-taking at the end of last week, when it reached its highest value since the beginning of 2018, at $ 1.2309. It gained almost 9% in 2020.
The dollar fell to 103.02 yen, and seemed in danger of testing the key support at 102.55. The pound sterling was firm at $ 1.3674, close to its recent top of $ 0.133686.
The dollar’s decline has been a support for gold, making the metal 0.6% firmer at $ 1,910 an ounce.
Oil prices stabilized after a few months of solid gains, with Brent finding resistance at around $ 52.50 a barrel. The recovery still left Brent down 21.5% in the year and WTI down 20.5%.
On Monday, futures fell 8 cents to $ 51.72, while 12 cents fell to $ 48.40 a barrel.