GLOBAL MARKETS-Asia shares turn lower as recovery concerns resurface

By Andrew Galbraith and Chibuike Oguh
SHANGHAI/NEW YORK, Jan 15 (Reuters) - Asian shares stumbled
lower in afternoon trade on Friday, reversing earlier gains as
rising COVID-19 cases in China reinforced investor concerns over
the prospects for a global economic recovery.
European bourses were set to open lower. Pan-region Euro
Stoxx 50 futures STXEc1 dropped 0.66% in early trade, while
German DAX futures FDXc1 lost 0.65% and FTSE futures FFIc1
dipped 0.35%.
Earlier on Friday, an Asian regional share index had edged
near record highs after U.S. President-elect Joe Biden proposed
a $1.9 trillion stimulus plan to jump-start the world's largest
economy and accelerate its response to COVID-19.
In prime-time remarks, Biden outlined a proposal that
includes $415 billion aimed at the COVID-19 response, some $1
trillion in direct relief to households, and roughly $440
billion for small businesses and communities hard hit by the
pandemic. But that initial boost faded by the afternoon as risk
appetite waned, lifting bond prices and the dollar, and hitting
regional equities.
"When you get to these lofty levels, what does it need to
take (the market) higher again?" said Stephen Innes, chief
global markets strategist at Axi.
"Ultimately, the market has excelled itself. I'm not saying
it's gotten too far over its skis, I don't think it has, but I
think the expectations for economic repricing are quite dramatic
... (we're) back again to the lack of economic conviction."
Global stocks had initially firmed on Thursday on a report
that the stimulus package could be as big as $2 trillion, much
more than markets were expecting.
Biden's comments came after Federal Reserve Chair Jerome
Powell struck a dovish tone in comments at a virtual symposium
with Princeton University.
Powell said the U.S. central bank is not raising interest
rates anytime soon and rejected suggestions the Fed might start
reducing its bond purchases in the near term. MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS was last down 0.59%.
Chinese blue-chips .CSI300 shed 0.97% amid worries over
rising COVID-19 cases in China, and after the Chinese central
bank drained liquidity from the country's banking system,
suggesting a tightening bias in monetary policy. More than 28 million people are under lockdown in China. On
Friday it reported the highest number of new COVID-19 cases in
more than 10 months. Hong Kong's Hang Seng .HSI fell 0.29% and Australia's ASX
200 .AXJO was flat, while Japan's Nikkei .N225 lost 0.65%
after touching three-decade highs in the previous session.
The falls in Asia echoed a late dip on Wall Street on
Thursday. While U.S. stocks spent most of the trading session in
positive territory, helped by the stimulus hopes, concerns over
the cost of the package led to a modest decline toward the end
of Wall Street trade.
S&P 500 e-mini futures EScv1 shed 0.61% to 3,768.
"The concern is what it's going to mean from a tax stand
point," said Tim Ghriskey, chief investment strategist at
Inverness Counsel in New York.
"Spending is easy to do but the question is how are you
going to pay for it? Markets often ignore politics but they
don't often ignore taxes."
The Dow Jones Industrial Average .DJI fell 0.22%, the S&P
500 .SPX lost 0.38%, and the Nasdaq Composite .IXIC dropped
0.12%.
On Friday, earnings season will kick into full swing with
results from JPMorgan JPM.N , Citigroup C.N and Wells Fargo
WFC.N . Investors will be looking to see if banks are starting
to take down credit reserves, resume buybacks, and provide
guidance that shows the economy is improving, said Thomas Hayes,
chairman of Great Hill Capital in New York.
In the currency market, the U.S. dollar was flat against the
yen JPY= at 103.79 and the dollar index =USD edged 0.1%
higher to 90.35.
The euro EUR= fell 0.16% to $1.2136.
U.S. yields stepped back as risk appetite waned. Benchmark
10-year Treasury notes US10YT=RR yielded 1.1005%, down from a
U.S. close of 1.129% on Thursday, while the 30-year yield
US30YT=RR dipped to 1.8409% from 1.874%.
Oil prices, which had risen on a weak dollar and strong
Chinese import data, dropped as COVID-19 concerns in China hit
sentiment.
Brent crude oil futures LCOc1 fell 0.83%, to $55.95 a
barrel while U.S. crude CLc1 lost 0.54% to $53.28.
Spot gold XAU= rose 0.11% to $1,848.36 per ounce.

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