Asian shares camped near 1-1/2 month highs on Monday as investors kept a wary eye on looming Chinese trade data on increasing signs a slowdown in the world's second-biggest economy is dragging on global growth. MSCI's broadest index of Asia-Pacific shares outside Japan was barely changed at 490.97 points after climbing to the highest since early December on Friday. Liquidity was expected to be light during Asian hours as Japan was on public holiday.
Australian shares ticked up 0.3 percent while New Zealand's benchmark index <.nZ50 was off 0.2 percent. Investors expect volatility to rise this week, "as some key issues that have been affecting market sentiment approach decision points," said Nick Twidale, analyst at Rakuten Securities. On the earnings front, U.S. banks are in sharp focus with quarterly results from Citigroup due Monday followed by JPMorgan Chase, Wells Fargo, Goldman Sachs and Morgan Stanley later in the week.
Expectations are dour with profits for U.S. companies forecast to rise 6.4 percent, down from an Oct. 1 estimate of 10.2 percent and a big drop from 2018's tax cut-fueled gain of more than 20 percent. Investor focus was also on the U.S. government shutdown, now in its 24th day, and with no resolution in sight. Further clouding the outlook for markets, Britain faces a hugely uncertain path with a vote for a deal for its exit from the European Union due in the U.K. parliament on Tuesday. All these factors were at play last week when the main U.S. indices ended Friday little changed as investors reset positions ahead of key risk events. Of more immediate concern was trade data from China later in the day, with recent signs Asia's largest economy was losing momentum and the government planning to lower its 2019 economic growth target.
The Sino-U.S. tariff war has already disrupted trade flows for hundreds of billions of dollars worth of goods and roiled global markets. While the two countries have been talks for months, few details have been provided of any progress made. "It's a relatively quiet day in terms of economic data releases with probably the Chinese Trade Balance the only tier 1 data set to trouble the scorers," Twidale added. "Expect sentiment to continue to dominate market direction with trades focussing closely on the news channels for the next twist in the various issues that are influencing the market."
The Australian dollar, a key gauge of global risk sentiment, dipped 0.2 percent from a one-month top of $0.7235 set on Friday. Elsewhere, the euro slipped again as it hit key technical levels following data from Italy on Friday that showed the euro zone's third-largest economy was at risk of recession. The single currency was last at $1.1458. The dollar's index, which measures the greenback against a basket of major currencies, was mostly flat at 95.645 after two straight days of gains. In commodities, oil prices declined on Friday as investors worried about a global slowdown.
(With inputs from agencies.)