Most Asia Stocks Dip this morning as the Dollar & Treasuries Edge Up, The S&P 500 & the DOW closed at record highs last night

06/04/2021 Most Asian stocks are lower this morning as concern China is curtailing loan growth hurt sentiment after U.S. stocks hit a record last night on optimism about the rebound in the world’s largest economy. Treasuries and the dollar ticked up. An Asia-Pacific share gauge dipped for the first day in four, led by losses in Japan, with markets in Hong Kong that are closed for a holiday. S&P 500 stock futures are slightly in the red, while European contracts are pointing higher. Oil rebounded as the chances of a breakthrough in talks to revive an Iranian nuclear accord were seen by analysts as slim, reducing the odds that crude flows from the country would pick up further. We in for a better start, with the JSE Top 40 futures up 684 points or 1.1%,. The Rand is steady at 14.57 vs the USD.
The FTSE/JSE Africa All-Share Index on Thursday closed up 1.1% to 67,236 supported by heavyweights Naspers and Prosus, with both gaining more than 5% during the session. The precious metals & mining index also added a healthy 2.5%, with banks on the backfoot, shedding just over 1% on the day. The Rand has strengthened 0.8% to 14.56 per US$ overnight, with the Yield on 10-year govt rand bonds that rose 5.50 bps to 9.55 %.
South Africa’s state electricity monopoly Eskom and telecom giant MTN both featured in the news over the holiday weekend:

  • Eskom Taking Contingency Steps After $500 Million Oracle Dispute
  • Banks Cut Off Nigeria’s Biggest Carrier MTN From Payment Platforms
  • NEWS:
  • Specter of Virus Stimulus 2.0 Spooks Biggest South African Bank
  • Next Africa: Mozambique Pays a Terrible Price for Spurning Help

ECONOMIC DATA:

  • 11: Feb. Electricity Production YoY, prior -3.2%
  • 11: Feb. Electricity Consumption YoY, prior -2.4%

GOVERNMENT:

  • South African commission of inquiry into state corruption resumes in Johannesburg, hearing Eskom related evidence

CENTRAL BANKS:

  • 8:30am: South African Reserve Bank Deputy Governor Fundi Tshazibana to take part in UBS panel discussion around IMF spring meetings

BOND SALES/PURCHASES:

  • 11am: South Africa to Sell 1.6 Billion Rand of 8.875% 2035 Bonds
  • 11am: South Africa to Sell 1.6 Billion Rand of 8.25% 2032 Bonds
  • 11am: South Africa to Sell 1.6 Billion Rand of 8% 2030 Bonds

EU/UK
The pan-European Stoxx 600 ended the session up 0.6%, with tech stocks climbing 2% to lead gains as almost all sectors and major bourses closed in positive territory. European investors were digesting data releases from the region Thursday that can offer more clues on the state of health of the European economy. Euro zone manufacturing activity grew at its fastest pace on record in March, with IHS Markit’s final manufacturing PMI coming in at 62.5 compared to February’s 57.9. The bounce was led by Germany, which notched a reading of 66.6 thanks to resurgent demand from the U.S. and China. However, German retail sales in February fell short of economist expectations to rise by 1.2%, a full 9% below the same time last year. In terms of individual share price movement, Dutch internet group Prosus climbed over 5% toward the top of the Stoxx 600 after raising its stake in German food delivery firm Delivery Hero. British rival Deliveroo sank another 2% in its second day of trading. Shares of the company flopped in its debut Wednesday, shedding as much as 30%. At the bottom of the index, French IT firm Atos plunged more than 12% after an audit found accounting errors at two of its U.S. units.
US
U.S. stocks climbed to record highs on Monday as a strong bounce in U.S. job growth and solid data in the services sector raised expectations for a swift economic recovery from the pandemic. The Dow Jones Industrial Average rose 373 points to 33,527, a record closing high. The S&P 500 gained 1.4% to 4,077, also hitting a new record close. The tech-heavy Nasdaq Composite also climbed 1.7% to 13,705. The Labor Department reported Friday that nonfarm payrolls increased by 916,000 in March, the highest since August 2020, while the unemployment rate fell to 6%. Economists surveyed by Dow Jones were expecting an increase of 675,000 and a jobless rate of 6%. Tesla shares popped more than 4% as the electric vehicle company reported production and delivery figures that broadly beat expectations. GameStop shares cut their double-digit losses and closed down about 2% after the video game retailer said it may sell up to $1 billion worth of stock. Classic reopening plays like airlines and cruise operators outperformed. Delta Airlines and United jumped more than 2% each, while Carnival and Norwegian Cruise Line gained 4.7% and 7.2%, respectively.
ASIA
Shares in Asia-Pacific were mixed in Tuesday trade, after major indexes on Wall Street surged to record closing highs overnight stateside. The Nikkei 225 in Japan slipped 0.99% while the Topix index dipped 1.22%. South Korea’s Kospi edged 0.15% higher. Mainland Chinese stocks were lower by the afternoon, with the Shanghai composite slipping 0.32% while the Shenzhen component shed 0.488%. China’s services sector activity grew in March, according to a private sector survey released Tuesday. The Caixin/Markit services Purchasing Managers’ Index for March came in at 54.3, as compared to February’s reading of 51.5. PMI readings above 50 represent expansion while those below that level signify contraction. PMI readings are sequential and represent month-on-month expansion or contraction. In Australia, the S&P/ASX 200 advanced 0.75%. The Reserve Bank of Australia on Tuesday announced its decision to maintain its policy settings. That included keeping its cash rate at 0.1%, largely in line with expectations of analysts in a Reuters poll. MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.37%. Markets in Hong Kong are closed on Tuesday for a holiday.
COMMODITIES
Gold advanced as investors weighed a drop in real yields against solid U.S. data that signaled a recovery from the pandemic. Spot gold rose 0.3% to $1,733.94 an ounce at 10:26 a.m. in Singapore. Silver climbed, while palladium and platinum were both steady.
Oil rebounded as the chances of a breakthrough in talks to revive an Iranian nuclear accord were seen by analysts as slim, reducing the odds that crude flows from the country would pick up further. West Texas Intermediate rose 0.8% after tumbling 4.6% on Monday, the biggest one-day drop since March 23. The fall was driven by prospects for the Iran talks later Tuesday, and a resurgence in Covid-19 infections in Europe. In addition, OPEC+
agreed last week to ease supply curbs in the coming months.
Copper in New York gave up some of Monday’s gains as top producer Chile said a fresh round of restrictions to combat Covid-19 won’t impact mine operations or exports. Copper on Comex fell 1.1% to $4.09 a pound as of 12:58 p.m. in Shanghai, following a 3.7% gain on Monday. The metal rose 2.4% on the London Metal Exchange in its first day of trading after the Easter holidays
Rebar futures in Shanghai neared a record high before retreating, as steel prices in China benefit from supply cuts and strong demand. Steel rebar in Shanghai surged as much as 0.8% to 5,200 yuan a ton, just short of a 5,230-yuan record high more than a decade ago. It pared gains later to trade little changed. Hot-rolled coil futures were down 0.1% from their highest since trading started in 2014. Iron ore in Singapore fell 0.4% from its highest in more than three weeks, while in Dalian futures traded 0.8% lower.
Some key events to watch this week:

  • The 2021 Spring Meetings of the International Monetary Fund and the World Bank Group take place virtually. U.S. Treasury Secretary Janet Yellen is among the participants of a climate discussion on Tuesday. Federal Reserve Chairman Jerome Powell takes part in a panel about the global economy on Thursday.
  • The Fed publishes minutes from its March meeting on Wednesday.
  • Japan releases its balance of payments numbers Thursday.
  • China’s consumer and producer prices data are due Friday.