Asian stocks retreated on Tuesday as worries about increasing COVID-19 deaths and lockdowns overshadowed optimism about the roll-out of coronavirus vaccinations, just days after indexes hit record highs.

EUROSTOXX 50 futures dipped 0.4% and FTSE futures fell 0.6%, indicating a weaker open for European stock markets. E-Mini futures for the S&P 500 were up 0.05%.

Markets showed little reaction to China’s industrial output, which grew in line with expectations in November, expanding for an eighth straight month as an economic recovery gathered pace.

The number of coronavirus deaths in the United States crossed 300,000 on Monday as the hardest hit nation started its first vaccine inoculations, while tighter COVID-19 restrictions were imposed on London.

“While investors can approach 2021 with optimism that an effective COVID-19 vaccine will be available, the path of the economic recovery remains unclear,” Allianz Global Investors said in a report.

Most Asian markets retreated, with MSCI’s index of Asia-Pacific shares outside Japan falling 0.6% to 637.8, the lowest in more than a week after having hit a string of record highs in recent weeks.

Chinese stocks eased 0.3% and Hong Kong lost 0.9%.

Markets in Japan and South Korea, both grappling with surging infection numbers and growing public frustration, slipped 0.4% and 0.5%.

Australian stocks fell 0.4%, pulled down by heavyweight miners on fears of higher regulatory scrutiny over surging iron ore prices in top consumer, China.

News of vaccines has powered gains in the last few months, with the Asian benchmark up nearly 16% so far this year, sitting just shy of a record struck last week. The rally has been led by markets in South Korea, China and Taiwan.

Last week, the United States authorised the emergency use of its first COVID-19 vaccine, developed by Pfizer and BioNTech. The vaccine has already been authorised in a handful of countries including Britain and Canada.

“We now know we are building a bridge to somewhere, providing clarity for policymakers, households and companies about getting to a post COVID stage,” strategists at BlackRock Investment Institute said in a report.

“Yet disappointing jobs data in recent weeks pointed to near term risks as the virus surges around the U.S., potentially slowing the restart,” they said.

On Monday, the S&P 500 closed down 0.4%, the Nasdaq Composite gained 0.5% and the Dow Jones Industrial Average hit a record high but fell back 0.6% for the day.

In foreign exchange markets, the British pound was firm against the dollar at $1.3332, after rising 0.8% on Monday as the UK and Europe agreed to continue Brexit talks.. It reached a 2 1/2-year high of $1.3540 earlier this month.

The dollar traded near 2-1/2-year lows against major peers as demand for the safest assets flagged. [USD/]

U.S. Treasury yields were relatively stable ahead of the Federal Reserve’s two-day policy meeting on Tuesday.

Market expectations are growing that the Fed will further ease monetary policy by expanding its bond buying programme, as U.S. lawmakers struggle to agree on a fiscal stimulus package.

The Bank of England and the Bank of Japan also close out their 2020 meetings this week.

Gold prices advanced 0.5% to $1,835.9 per ounce.

Oil prices dipped 0.7% to $46.6 a barrel as persistent oversupply largely offset hopes that a rollout of coronavirus vaccines will lift global fuel demand.


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