* Graphic: Global asset performance http://tmsnrt.rs/2yaDPgn
* Graphic: World FX rates http://tmsnrt.rs/2egbfVh
By Ritvik Carvalho
LONDON, Jan 18 (Reuters) - Global stock markets sank on
Monday as soaring COVID-19 cases offset investor hopes of a
quick economic recovery, while the Chinese economy posted a
better-than-expected rebound in the fourth quarter of 2020.
European stocks as measured by the STOXX 600 index .STOXX
opened 0.3% weaker, after failed merger talks between French
retailer Carrefour CARR.PA and Alimentation Couche-Tard
ATDb.TO . .EU
Germany's DAX .GDAXI fell 0.2%, France's CAC 40 index fell
0.3% and Italy's FTSE MIB index slipped 0.3%. Britain's FTSE 100
index fell 0.1% .FTSE .
In Asia, Chinese blue chips .CSI300 gained 0.8% 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,
though retail sales missed the mark. "The recovery in domestic demand still lacks a solid
backing," said Lauri Hälikkä, fixed income and FX strategist at
SEB. "Sporadic virus outbreaks have intensified downside risks
in the near term."
Hallika said the impact of the latest regional lockdowns and
mass testing is likely to be limited and short-lived.
The 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
US10YT=RR 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. 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.
Elsewhere in Asian markets, Japan's Nikkei .N225 slipped
0.8% and away from a 30-year high.
MSCI'S All Country World Index .MIWD00000PUS , which tracks
stocks across 49 countries, fell 0.1%, down for a second session
after hitting record highs only last week.
E-Mini futures for the S&P 500 ESc1 dipped 0.2%, though
Wall Street will be closed on Monday for a holiday.
BUBBLE?
Investors have discussed the question of whether markets are
in or may be headed for a bubble.
In a monthly letter to clients last week, Mark Haefele,
chief investment officer at UBS Global Wealth Management said
all of the preconditions for a bubble are in place.
"Financing costs are at record lows, new participants are
being drawn into markets, and the combination of high
accumulated savings and low prospective returns on traditional
assets create both the means and the desire to engage in
speculative activity," he said, warning that in the months
ahead, investors will need to pay particular attention to "risks
of a monetary policy reversal, rising equity valuations, and the
rate of the post-pandemic recovery."
Haefele said however that while he sees pockets of
speculation, the broader equity market is not in a bubble.
Cryptocurrency Bitcoin traded up 1.2%, fetching $36,236.
BTC=BTSP
The dollar index duly firmed to 90.908, its strongest since
Dec. 21, =USD , and away from its recent 2-1/2 year trough at
89.206.
The euro had retreated to $1.2065 EUR= , from its January
peak at $1.2349, while the dollar held steady on the yen at
103.78 JPY= and well above the recent low at 102.57.
The Canadian dollar eased to $1.2792 per dollar CAD= after
Reuters reported Biden planned to revoke the permit for the
Keystone XL oil pipeline. Biden's pick for Treasury Secretary, Janet Yellen, is
expected to rule out seeking a weaker dollar when testifying on
Capital Hill on Tuesday, the Wall Street Journal reported.
Gold prices gained 0.4% to $1,833 an ounce XAU= , compared
to its January top of $1,959. GOL/
Oil prices ran into profit-taking on worries the spread of
increasingly tight lockdowns globally would hurt demand. O/R
Brent crude LCOc1 futures were off 0.6% at $54.58 a
barrel, while U.S. crude CLc1 eased 0.4% to $52.15.
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China Q4 GDP beats expectations https://tmsnrt.rs/3oW0gjZ
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