Asian stocks retreated from a record high on Monday after reports of the United States preparing to impose sanctions on some Chinese officials highlighted geopolitical tensions, while oil prices fell due to the outbreak of virus cases.
In a signal that markets elsewhere would start weaker, Eurostoxx 50 futures were down 0.4%, German DAX futures were down 0.3% while London’s FTSE were flat. E-Mini futures for the US benchmark S&P 500 slipped 0.2%.
The largest MSCI index of Asia-Pacific stocks outside of Japan fell 0.1% after four consecutive sessions of gains. The index hit a record 644.3 points early Monday.
It’s up about 16% so far this year, the best performance since a 33% jump in 2017.
China’s blue chip index fell 0.8%, largely ignoring strong export data, while Hong Kong’s Hang Seng was down 1.7%.
Japan’s Nikkei was down 0.46% from its highest level in nearly 30 years, while Australian stocks rose 0.6%.
US Treasury bonds were flat, with benchmark yield close to its highest level in nine months at just under 1%, Bloomberg reported.
The sale began after Reuters news agency quoted sources as saying the United States was preparing sanctions against at least a dozen Chinese officials for their alleged role in Beijing’s disqualification of opposition politicians in Hong Kong.
The move comes as President Donald Trump’s administration maintains pressure on Beijing during its final weeks in office.
“One thing that worries the market is that on its [way] out of the office, Trump would seek retaliation on China. This news therefore speaks to this fear, ”said Kyle Rodda, market strategist at IG Markets in Melbourne.
“At the end of the day, the market knows it only has six weeks left. The focus is still on vaccine deployments and fiscal stimulus in the United States. “
Asian markets had started the day higher with hopes of a rapid global economic recovery with the rollout of coronavirus vaccines, starting this week in the UK.
U.S. officials will also discuss the schedule this week ahead of the first round of vaccinations scheduled for this month.
Hopes that vaccines will help curb the pandemic, which has so far killed more than 1.5 million people worldwide, has spiked actions in recent weeks.
On Wall Street, stock indexes hit new all-time highs on Friday, with the Dow Jones rising 0.8%, the S&P 500 gaining 0.9% and the Nasdaq adding 0.7%.
“The vaccine will break the link between mobility and infection rate, enabling the fastest growth in global GDP in more than two decades,” analysts at JP Morgan wrote in a note, forecasting global growth of 4.7% in 2021.
Still, expectations for a US stimulus package have accelerated after weak payroll data last week, after months of deadlocked negotiations.
The US economy added the fewest workers in six months in November, with non-farm payrolls increasing 245,000 jobs last month, well below expectations of a 469,000 increase.
A two-party group of Democrats and Republicans have offered a $ 0.9 trillion compromise that leaders on both sides appear ready to agree to.
In currencies, investors are focusing on a final attempt by the UK and EU to strike a post-Brexit trade deal this week, with likely a few days for negotiators to avoid a chaotic separation of paths at the end of the year. .
If there is no deal, a five-year Brexit divorce will end haphazardly, as will the UK and its former EU partners grappling with the high economic cost of the COVID pandemic -19.
The pound was a little weaker at $ 1.3419 while the European single currency was up 0.1% to $ 1.2133, not too far from an April 2018 high of $ 1.2177.
The risk-sensitive Australian dollar rose 0.1% to $ 0.7433.
That left the US dollar down 0.1% to 90.702 against a basket of major currencies, after hitting a 2.5-year low last week.
In commodities, oil prices have slipped from their highest levels since March as a continuing spike in coronavirus cases around the world has forced a series of new lockdowns, including tough new measures in California from South.
US crude fell 24 cents to $ 46.02 a barrel and Brent fell 26 cents to $ 48.99. Brent has lost about a quarter of its value so far this year.
Spot gold, which hit a record $ 2,072.49 an ounce, was the last at $ 1,838.9, still up 21% this year.