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GLOBAL MARKETS-Asia shares given pause by Tokyo lockdown talk

Published 2021-01-03, 08:05 p/m
© Reuters.

* Asian stock markets : https://tmsnrt.rs/2zpUAr4

* Nikkei off 30-year high on report of Tokyo emergency

* Dollar under pressure as U.S. deficits swell

* Factory surveys, U.S. jobs and Fed minutes all ahead

By Wayne Cole

SYDNEY, Jan 4 (Reuters) - Asian share markets hit pause on Monday as reports of a possible tightening in coronavirus emergency rules for Tokyo pulled Japanese stocks off 30-year highs, while also lifting the safe-haven yen.

Investors are still counting on central banks to keep money super cheap while the rollout of coronavirus vaccines helps revive the global economy over time, but much of that optimism is already priced in and the virus is not cooperating.

Japan's Nikkei .N225 shed its early gains to fall 1.1% when Fuji TV reported the government was considering a state of emergency for capital Tokyo and three surrounding prefectures.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS edged up 0.1%, a whisker from a record high.

E-Mini futures for the S&P 500 ESc1 dipped 0.2% after touching a new all-time top in early trade.

Investors are cautiously watching runoff elections in Georgia for two U.S. Senate seats on Tuesday that will determine which party controls the Senate. the Republicans win one or both, they will retain a slim majority in the chamber and can block President-elect Joe Biden's legislative goals and judicial nominees.

"If Democrats win both races, Vice President-elect Kamala Harris would be the tiebreaking vote, giving the party unified control of the White House and Congress," noted analysts at CBA.

"This would raise the likelihood a material U.S. infrastructure spending package gets fast tracked through Congress."

Minutes of the Federal Reserve's December meeting due on Wednesday should offer more detail on discussions about making their forward policy guidance more explicit and the chance of a further increase in asset buying this year.

The data calendar includes a raft of manufacturing surveys across the globe, which will show how industry is coping with the spread of the coronavirus, and the closely watched ISM surveys of U.S. factories and services.

A survey showed Japan's factory activity stabilised for the first time in two years in December, while activity in Taiwan picked up. sees the U.S. December payroll report where median forecasts are for only a modest increase of 100,000.

Analysts as Barclays (LON:BARC) are tipping a fall of 50,000 in jobs, which would be a shock to market hopes of a speedy recovery.

"A number of incoming indicators on activity point to slower momentum as the economy closes out the year, including data on labour markets where initial claims rose during the December survey period," said economist Michael Gapen in a note.

Such a drop would add pressure on the Fed to ease further, another burden for the dollar which is already buckling under the weight of the massive U.S. budget and trade deficits.

The dollar index was last at 89.786 =USD , not far from its recent 2-1/2-year low of 89.515 having shed almost 7% in 2020.

The euro inched up to $1.2245 EUR= , having run into profit taking late last week when it reached the highest since early 2018 at $1.2309. It gained almost 9% over 2020.

The dollar slipped to 103.02 yen JPY= , and looked in danger of testing key support at 102.55. Sterling was firm at $1.3674 GBP= , within spitting distance of its recent top of $0.13686.

The decline in the dollar has been a support for gold, leaving the metal 0.6% firmer at $1,910 an ounce XAU= .

Oil prices have steadied after a couple of months of solid gains, with Brent meeting resistance around $52.50 a barrel. The rebound still left Brent down 21.5% for the year, and WTI 20.5%. O/R

On Monday, Brent crude LCOc1 futures fell 8 cents to $51.72, while U.S. crude CLc1 eased 12 cents to $48.40 a barrel.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Asia stock markets

https://tmsnrt.rs/2zpUAr4 Asia-Pacific valuations

https://tmsnrt.rs/2Dr2BQA

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Editing by Jane Wardell)

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