23/03/2021 Asian stocks fell this morning as Treasuries and the dollar edged higher, with traders monitoring setbacks in the recovery from the pandemic and braced for U.S. auctions that will test demand for bonds. Equity indexes slipped into the red across the region, with China and Hong Kong underperforming and Australia little changed. U.S. and European equity futures retreated after an overnight rally on Wall Street that saw the Nasdaq 100 outperform the S&P 500, aided by a drop in long-term borrowing costs.
Locally, we will get back to normal trade after Thrusday’s Futures close-out, Friday’s Index rebalance and yesterday’s public holiday. We can expect the JSE to open lower, despite a solid session in the US overnight. Asia is softer, US and European futures lower, 700HK down 0.62% and IG Top 40 down 262 points. On Friday the JSE Allshare closed down 1.24%. The ZAR has lost a little ground this a.m after yesterday’s volatile session on the back of the Turkish Lira, R/$ 14.83, R/GBP 20.51. There are some large names going EX div tomorrow that might be worth keeping an eye on, ARI, BVT, BTI, CSB, HYP, JSE, MTM, MTH.
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European stocks closed slightly higher on Monday, with investors watching Turkey closely following President Erdogan’s surprise decision to replace the central bank’s chief. The pan-European Stoxx 600 finished up 0.2%, with autos climbing 1.7% while retail stocks dropped 1%. European markets received a muted handover from Asia-Pacific, where shares traded mixed on Monday as investors watched moves in the Turkish lira and bonds, following a sudden upheaval at the country’s central bank. Volatility for the currency comes after President Recep Tayyip Erdogan abruptly replaced the central bank chief just days after a sharp interest rate hike, which Erdogan vehemently opposes.
Overnight the Dow finished the session 103 points higher, for a gain of 0.32%. The S&P 500 broke a two-day losing streak and advanced 0.7%. The Nasdaq Composite was the relative outperformer, jumping 1.23% for its fifth positive session in six. On Tuesday Fed Chairman Jerome Powell and Treasury Secretary Janet Yellen will make their first joint appearance before the U.S. House Committee on Financial Services. The discussion will centre on the oversight of the Treasury’s and Federal Reserve’s pandemic response. In prepared remarks published ahead of the hearing, Powell noted that the recovery is gaining steam, before adding there’s still a long way to go. Today also marks the one-year anniversary of the market’s bottom as the coronavirus pandemic sent stocks tumbling 30% at the fastest pace on record. Since the intraday low on March 23 both the S&P 500 and Dow have advanced 80%. The Nasdaq Composite is up 93%, while the Russell 2000 has surged 135%.
Asian markets reversed earlier gains to trade lower across the region. Chinese mainland markets started the sell-off after sanction announcements against prominent people and companies by the UK, EU and the US. Chinese search giant Baidu made its debut in Hong Kong on Tuesday, with shares rising about 0.24% by the afternoon from their issue price. Hang Seng – 1.39%, 700HK – 0.62%, Nikkei – 0.38%, ASX 200 -0.10%
Oil is softer as new Pandemic curbs and slow vaccine rollouts in Europe will slow down demand and Chinese sanctions by EU, UK and the US could spiral into a tit for tat trade issue. Both WTI and Brent had their worst week last week with both losing over 6%. WTI – 1.14% $ 60.87, Brent – 1.11% $ 63.88.
Gold fell over 1 % yesterday as investors flocked to the dollar and government bonds, spooked by Turkey’s decision to replace its central bank head with a critic of high interest rates. Gold is a tad softer this morning down 0.06%, Platinum down 0.67% $ 1178 and Palladium – 0.50% $ 2609.