Strong economic data, Covid-19 woes in focus as Asian markets set for muted start

Asian markets were set for sideways trade at Thursday's open as lingering pandemic concerns pushed against stronger economic data, and with little firm direction from Wall Street.

Australia's benchmark S&P/ASX 200 index was down 0.1 per cent in early trading, while Japan's Nikkei 225 futures were up 0.05 per cent. Hong Kong's Hang Seng index futures were down 0.2 per cent.

The MSCI's global stock index was up 0.04 per cent.

Strong retail sales out of the United States, coupled with new indications the Federal Reserve will maintain its accommodative stance and an ongoing push for further US stimulus, helped drive expectations the world's largest economy will continue to post gains coming out of the pandemic.

But concern at the rapid spread of new variants tempered enthusiasm.

"With an even larger stimulus package likely to be passed by Congress before the end of March, the US economic recovery could gain more momentum in 2021," wrote Commonwealth Bank of Australia currency analyst Carol Kong.

"Despite the recent positive vaccine developments, the global economic outlook remains uncertain partly because of the spreading virus variants."

On Wall Street, technology stocks faced some pressure on inflation concerns, driving down the Nasdaq while other companies rose on broader economic optimism.

The Dow Jones Industrial Average rose 0.29 per cent, while the S&P 500 lost 0.03 per cent and the Nasdaq Composite dropped 0.58 per cent.

But while investors eyed inflation, minutes from the January Fed meeting showed policymakers willing to push further accommodation to boost the pandemic-scarred US economy.

Persistent optimism spread to the US dollar, which rose against other currencies. The dollar index, a measure of the currency's strength against six other major currencies was last 0.25 per cent higher.

The risk-on appetite was also apparent in bitcoin, which continued its upward march to exceed $52,000 amid signs it maybe gaining more mainstream acceptance.

An ongoing deep freeze in Texas continued to drive up oil prices, as the unusually cold weather hampered output at the largest US crude producing state. Brent crude gained 1.6 per cent, while US West Texas Intermediate (WTI) crude settled up 1.8 per cent, both levels not seen since January 2020.

Safe-haven US Treasury yields were down slightly on Wednesday amid the stronger economic data. The benchmark 10-year yield, which touched 1.333 per cent, its highest level since February 27, 2020, later dropped to 1.2720 per cent. The 30-year US yield also dropped.

Spot gold edged 0.2 per cent lower to $1,815.80 per ounce pressured by higher benchmark US Treasury yields. US gold futures fell 0.4 per cent to $1,815.70 per ounce.

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