Global stock markets wavered on Monday as soaring COVID-19 cases offset investor hopes of a quick economic recovery, even after data showing that the Chinese economy rebounded faster-than-expected in the fourth quarter of 2020, Reuters reported.
European stocks as measured by the STOXX 600 index struggled for direction, last trading 0.1% higher as of 1446 GMT, after failed merger talks between French retailer Carrefour and Alimentation Couche-Tard pulled the gauge lower at the open. The continent’s 50 biggest stocks were down 0.2% [.EU]
In Asia, Chinese blue chips gained 1.1% after the economy was reported to have grown 6.5% in the fourth quarter, on a year earlier, topping forecasts of 6.1%.
Industrial production for December also beat estimates, although retail sales missed expectations.
“The recovery in domestic demand still lacks a solid backing,” said Lauri Halikka, fixed income and FX strategist at SEB. “Sporadic virus outbreaks have intensified downside risks in the near term.”
China reported more than 100 new COVID-19 cases for the sixth consecutive day, with rising infections in the northeast fuelling concern of another wave when hundreds of millions of people travel for the Lunar New Year holiday.
Tough new controls in the city of Gongzhuling in Jilin province, which has a population of about 1 million people, brings the total number of people under lockdown to more than 29 million.
Hallika said the impact of the latest regional lockdowns and mass testing was likely to be limited and short-lived.
The economic pick-up in China was a marked contrast to the United States and Europe, where the spread of coronavirus has hit consumer spending, underlined by dismal U.S. retail sales reported on Friday.
Poor U.S. consumer spending data last week helped Treasuries pare some of their recent steep losses and 10-year yields were trading at 1.097%, down from last week’s top of 1.187%.
The more sober mood in turn boosted the safe-haven U.S. dollar, catching a bearish market deeply short. Speculators increased their net short dollar position to the largest since May 2011 in the week ended Jan. 12.
Also evident are doubts about how much of U.S. President-elect Joe Biden’s stimulus package will make it through Congress given Republican opposition, and the risk of more violence at his inauguration on Wednesday.
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