GLOBAL MARKETS-Asian shares falter from 1-1/2-mth highs, markets wary about China data

Published:Monday, January 14, 2019
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SYDNEY (Reuters) - Asian shares turned down on Monday as China trade data started trickling in and as investors looked to key corporate earnings later in the week to take the pulse of a cooling global economy.

FILE PHOTO - Investors look at an electronic board showing stock information at a brokerage house in Shanghai, China June 20, 2018. REUTERS/Aly Song

Partial data on trade from China showed dollar-denominated exports growth was the highest since 2011. Markets are still awaiting numbers for December due shortly.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS stumbled 0.7 percent after climbing to the highest since early December on Friday, with Chinese and Hong Kong shares the biggest losers.

Liquidity was generally expected to be light during Asian hours as Japan was on public holiday.

Chinese shares opened in the red, with the blue-chip index .CSI300 down 0.3 percent and Shanghai's SSE Composite .SSEC off 0.2 percent. Hong Kong's Hang Seng index .HSI dropped 1.2 percent while Australian shares turned down after starting firm.

E-minis for the S&P 500 ESc1 too stumbled, in an indication of risk aversion.

The trade data from China was the main focus, with recent signs Asia’s largest economy was losing momentum and the government was planning to lower its 2019 economic growth target.

The Sino-U.S. tariff war has already disrupted trade flows for hundreds of billions of dollars worth of goods and roiled global markets. While the two countries have been in talks for months, few details have been provided of any progress made.

Investors expect volatility to rise this week, “as some key issues that have been affecting market sentiment approach decision points,” said Nick Twidale, analyst at Rakuten Securities.

“Expect sentiment to continue to dominate market direction with trades focussing closely on the news channels for the next twist in the various issues that are influencing the market.”

On the earnings front, U.S. banks are in sharp focus with quarterly results from Citigroup (C.N) due Monday followed by JPMorgan Chase (JPM.N), Wells Fargo (WFC.N), Goldman Sachs (GS.N) and Morgan Stanley (MS.N) later in the week.

Expectations are dour with profits for U.S. companies forecast to rise 6.4 percent, down from an Oct. 1 estimate of 10.2 percent and a big drop from 2018’s tax cut-fueled gain of more than 20 percent.

Investor attention was also on the U.S. government shutdown, now in its 24th day, and with no resolution in sight.

Further clouding the outlook, Britain faces a hugely uncertain path with a vote for a deal for its exit from the European Union due in the U.K. parliament on Tuesday.

All these factors were at play last week when the main U.S. indices ended Friday little changed as investors reset positions ahead of key risk events. [.N]

The Australian dollar AUD=D3, a key gauge of global risk sentiment and a liquid proxy for the Chinese yuan, dipped 0.1 percent from a one-month top of $0.7235 set on Friday.

Elsewhere, the euro was subdued EUR= as it hit key technical levels following data from Italy on Friday that showed the euro zone's third-largest economy was at risk of recession.

The single currency was last at $1.1475.

The dollar’s index .DXY, which measures the greenback against a basket of major currencies, edged 0.1 percent lower to 95.57 after two straight days of gains.

Containers and trucks are seen on a snowy day at an automated container terminal in Qingdao port, Shandong province, China December 10, 2018, Picture take December 10, 2018. REUTERS/Stringer

In commodities, oil prices extended losses from Friday as investors worried about a global slowdown. [O/R]

U.S. crude CLc1 was down 19 cents at $51.4 while Brent LCOc1 eased 17 cents to $60.31.

Gold XAU= gained to inch towards a recent seven-month high of $1,298.42 an ounce.

Editing by Shri Navaratnam

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