Reuters - Asia share indexes retreated from highs Monday as disappointing news on U.S. consumer spending tempered risk sentiment ahead of a closely watched reading on the health of the China economy.
Also evident were doubts about how much of U.S. President-elect Joe Biden's virus aid package will make it through Congress given Republican opposition and the risk of more mob violence at his inauguration Wednesday.
MSCI's broadest index of Asia-Pacific shares outside Japan lost 0.3% having hit a string of records in recent weeks. Japan's Nikkei slipped 1% and away from a 30-year high.
E-Mini futures for the S&P 500 dipped 0.3% though Wall Street will be closed Monday for a holiday.
China gross domestic product data was expected to show growth picked up to an annual 6.1% last quarter, from 4.9% in the third quarter. Monthly figures on retail sales and industrial output should show brisk activity as the year ended.
"We expect fourth quarter China gross domestic product growth accelerated to an above‑consensus 6.5% a year because of robust industrial output, the recovery in services and strong exports," CBA's head of international economics Joseph Capurso said.
"The data will confirm the Chinese economy ended the year on a strong footing."
That would be a contrast to the U.S. and Europe where the spread of coronavirus has scarred consumer spending, underlined by dismal U.S. retail sales reported Friday.
"The data brings into question the durability of the recent move higher in bond yields and the rise in inflation compensation," analysts at ANZ said.
"There's a lot of good news around vaccines and stimulus priced into equities, but optimism is being challenged by the reality of the tough few months ahead," they said. "The risk across Europe is that lockdowns will be extended and U.S. cases could lift sharply as the UK COVID variant spreads."
That will put the focus on earnings guidance from corporate results this week, which include Band of America, Morgan Stanley, Goldman Sachs and Netflix.
The poor U.S. data helped Treasurys earn back some of their recent losses and 10-year yields were trading at 1.087%, 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.
The dollar index duly rallied to 90.837, and away from its recent two-and-a-half-year trough at 89.206.
The euro had retreated to $1.2068, from its January peak at $1.2349, while the dollar held steady on the yen at 103.93 and well above the recent low at 102.57.
Biden's pick for Treasury Secretary, Janet Yellen, is expected to rule out seeking a weaker dollar when testifying on Capitol Hill Tuesday, The Wall Street Journal reported.
Gold prices were undermined by the bounce in the dollar leaving the metal down at $1,812 an ounce, compared with its January top of $1,959.
Oil futures ran into selling following recent gains on worries the spread of increasingly tight lockdowns worldwide would hurt demand.
Brent crude futures were off 12 cents at $54.98 a barrel, while U.S. crude eased 11 cents to $52.25.