Oil extends gains on OPEC+ supply restraint

05/03/2021 Today is the anniversary of SA’s first diagnosed case of the Corona Virus. Asian stocks and U.S. futures have bounced off earlier lows as investors digested comments from Federal Reserve Chairman Jerome Powell that fell well short of trying to rein in bond yields. Treasuries held a decline. Oil prices leapt after the OPEC+ alliance surprised traders with its decision to keep output unchanged. Locally the JSE All Share fell 0.85% with Naspers and Prosus losing 3.91 and 3.51 percent respectively, FirstRand closed at a one year high after reporting numbers and declaring a R 110 dividend despite lower overall earnings.

The South African Reserve Bank will publish data on government bond holdings for February, along with figures on foreign-exchange and gold reserves.

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ECONOMIC DATA:
Feb. Gross Reserves, fall to $ 53.8 est. $55b, prior $54.8b
Feb. Net Reserves, fall to $ 51.5 est. $52b, prior $52b
European markets closed mostly lower as the rise in bond yields saw jitters return to global stocks once again. The pan-European Stoxx 600 ended the session down by 0.4%, having earlier fallen more than 1%. Basic resources dropped 4.3% while utilities added 1.7%. On the data front, U.K. construction industry activity climbed by more than expected in February. The IHS Markit/CIPS UK construction PMI (purchasing managers’ index) rose to 53.3 from 49.2 in January, returning to expansion and outstripping expectations. Euro zone retail spending fell sharply in January, official figures revealed Thursday, down 5.9% month-on-month and falling significantly short of average forecasts for a 1.1% contraction.
Overnight in the U.S saw the markets sell-off with the Dow losing 1.11%, the S&P lost 1.34% and the Nasdaq down 2.11% tuning negative for the first time in 2021. The moves were triggered by Federal Reserve Chair Jerome Powell’s remarks on rising bond yields. He said the recent runup caught his attention but he didn’t give any indication of how the central bank would rein it in. Some investors had expected the Fed chair to signal his willingness to adjust the Fed’s asset purchase program. All eyes will be on February jobs report, which is set to be released Friday morning. Economists expect to see that 210,000 payrolls were added in February, compared to just 49,000 in January, according to Dow Jones. Futures have bounced off earlier lows with the Dow down just 17 points and the S&P flat.
Shares in Asia-Pacific are mostly lower as investors watch bond yields as well as technology stocks in the region. Mainland Chinese stocks declined by the afternoon, with the Shanghai composite shedding 0.34% while the Shenzhen component slipped 0.115%. Chinese Premier Li Keqiang announced the world’s second-largest economy would target growth of over 6% for 2021. In Japan, the Nikkei 225 slipped 0.61% while the Topix index was fractionally higher. South Korea’s Kospi fell 0.49%. MSCI’s broadest index of Asia-Pacific shares shed 0.56%.
Gold slumped to a near nine-month low below $ 1700 and headed for a third straight weekly decline after Federal Reserve Chair Jerome Powell disappointed investors with his view on rising yields that pushed up the dollar and bond yields. The Metal is off the lows trading at $ 1697.
Oil prices are higher adding to big gains overnight after OPEC and its allies agreed to not increase supply in April as they await a more solid recovery in demand from the coronavirus pandemic. Brent + 1.29% at $ 67.61 and WTI 1.25% at $ 64.62.