SYDNEY - Most Asian share markets followed Wall Street higher on Monday, though investors were wary of being disappointed yet again by economic data from China and policy stimulus in the euro zone. Adding to the air of caution was a retreat in Chinese equities, in part on news the securities regulator had barred three major brokerages from opening new margin trading accounts for clients for three months. An explosion in margin trading is one reason China stocks soared in recent months and shares in the brokers opened sharply lower. The Shanghai market shed 3.9 percent, while the CSI300 index of the largest listed companies in Shanghai and Shenzhen slid 4.2 percent. Markets elsewhere in the region were generally firmer, with Australias main index up 0.9 percent and Japans Nikkei rising 0.6 percent. MSCIs broadest index of Asia-Pacific shares outside Japan added 0.4 percent to probe six-week highs. Not so positive was Sunday data showing Chinese new home prices in December fell an average 4.3 percent year-on-year in 68 of the 70 major cities monitored. Though property sales volumes picked up, massive inventories of unsold homes were expected to keep pressure on the sector and the economy well into 2015. That was just an appetizer to Tuesdays report on gross domestic product which is expected to show Chinas annual growth slowed to 7.2 percent in the last quarter, meaning full-year growth would undershoot Beijings 7.5 percent target and would be weakest in 24 years. But the main event of the week will be Thursdays meeting of the ECB, which is considered almost certain launch a government bond-buying campaign in a bid to fight off deflation. Sources have told Reuters the ECB may adopt a hybrid approach - buying debt and sharing some of the risk across the euro zone while national central banks make separate purchases of their own. There has also been talk the program would be limited in size to 500 billion euros, an amount that would almost certainly disappoint investors eager for bold measures. The market is baying for action from the ECB on Thursday, with expectations now firmly entrenched in favor of a QE announcement, said James Ashley, chief European economist at RBC Capital Markets. Ashley suspects the ECB will not put an amount on the bonds to be bought and will rather refer to the current objective of expanding its balance sheet to 3 trillion euros. But with consumer prices falling, even that might not be enough. We think that the 3 trillion goal will need to be raised at some point in the future - and with that, so too will the amount of asset purchases, said Ashley. Just to make the challenge all the greater, the Greek general election is due on Jan. 25 and could see the anti-bailout Syriza party win but without a controlling majority. All this uncertainty kept the euro pinned at $1.1566, having hit an 11-year low of $1.14595 on Friday. The common currency was shaky on the Swiss franc at 0.9970 after tumbling 17 percent last week when the Swiss National Bank abandoned its cap on the franc. The dollar was a shade softer against the safe-haven yen at 117.19, but a touch firmer on a basket of currencies at 92.614. Oil prices had a soft tone as Brent crude futures eased 42 cents to $49.75, while U.S. crude lost 38 cents to $48.31 a barrel.
Posted on: Mon, 19 Jan 2015 10:00:00 +0000
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