Share markets were choppy on Monday as a slew of Chinese economic data confirmed the deadening effect of coronavirus restrictions on consumer spending, prompting Beijing to again ease monetary policy.
A holiday in the United States made for thin trading, but that did not stop Treasury futures from sliding further and Brent crude hitting a three-year top of $86.71 (Sh9,798) a barrel.
Worryingly for the world’s second-largest economy, retail sales rose only 1.7 per cent year-on-year in December, missing forecasts for a 3.7 per cent rise.
Industrial output did fare better and the economy as a whole grew a little above forecasts at 4.0 per cent in the fourth quarter.
China’s central bank also surprised by cutting some key lending rates by a sizable 10 basis points.
“The cut was larger than expected, suggesting that the authorities have become more preoccupied about weakness in the economy,” said Carlos Casanova, senior Asia economist at Union Bancaire Privee in Hong Kong.
“The latter (Omicron risks) will only start to be fully priced in the combined Jan-Feb data, as the most severe lockdowns started in late December.”
The easing seemed to help China blue chips, which edged up 0.9 per cent in the wake of the data.
MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.3 per cent, while Japan’s Nikkei bounced 0.8 per cent after losing 1.2 per cent last week.
Nasdaq futures slid another 0.3 per cent, while S&P 500 futures lost 0.1 per cent. EUROSTOXX 50 futures edged up 0.4 per cent and FTSE futures were flat.
The main feature of the market recently has been a rotation into value stocks and away from growth, particularly technology. The S&P 500 information technology sector, which accounts for nearly 29 per cent of the index, has shed 5.5 per cent this year.
With valuations still high, earnings will have to be strong to stop further losses. Overall S&P 500 earnings are expected to climb 23.1 per cent this season, according to Refinitiv IBES, while the tech sector is seen up by 15.6 per cent.