Asian stocks erase gains as further data awaited

US stock futures dropped in Asia after the S&P 500 capped a fourth week of gains Friday, when the VIX — Wall Street’s “fear gauge” and a measure of equity volatility — fell to its lowest since January 2020.

This week, investors will be looking especially closely at Chinese activity data to gauge the health of the world’s second largest economy. Traders will be assessing shadow banking stocks after Chinese authorities said they recently opened criminal investigations into the money management business of Zhongzhi Enterprise Group Co.

US stocks are likely to extend the rally but a "modest pullback would not surprise," said Tony Sycamore, an analyst at IG Group in Sydney. "End of month, early December looks like a good candidate for a pullback to rebuild energy and to set up for the end of year fireworks."

The dollar was mixed in early Monday trade after Bloomberg’s dollar index slipped 0.5% last week.

The US currency may “remain heavy” for most of the week as fund managers adjust hedges and cash heads into developing economies, Commonwealth Bank of Australia strategists including Joseph Capurso wrote in a note to clients. “The backdrop of low volatility and expectations for a soft landing in the US economy supports portfolio capital flows into emerging markets,” they wrote.