Stocks Slip from Record Highs; Dollar Snaps Slide; California to lift most restrictions in June

07/04/2021 Global stocks traded around all-time highs Wednesday as investors weighed the economic rebound from the pandemic and stimulus support. The dollar halted a four-day loss. A gauge of Asia-Pacific equities fluctuated, as did U.S. and European futures. Chinese stocks underperformed while Japan advanced. Toshiba Corp. shares are poised to surge after the company received an initial buyout offer from CVC Capital Partners. The S&P 500 and Nasdaq 100 retreated overnight as volume on U.S. exchanges slipped below 10 billion shares for the first time this year. Oil held above $59 a barrel amid optimism that economic expansion will pick up. The International Monetary Fund upgraded its global growth forecast while warning about a divergence between advanced and less-developed economies. The organization now expects the world economy to grow by 6% in 2021, up from its 5.5% forecast in January. Looking further ahead, global GDP for 2022 is seen increasing by 4.4%, higher than an earlier estimate of 4.2% . Tencent trades 3.3% lower in HK. We in for a slightly lower start, with the JSE Top 40 futures down 270 points or 0.43%,. The Rand is steady at 14.52 vs the USD.
The FTSE/JSE Africa All-Share Index closed up 1.2% to 68,063. Most sectors ended in positive territory, with the precious metals and mining index that gained the most, up 2.75%. Banks also added a healthy 2.45%, with property and retailers up 1.48% and 1.02% respectively. Naspers and Prosus were on the backfoot, tracking global tech stocks lower after recent good gains. The Rand strengthens 0.2% to 14.52 per US$., with the Yield on 10-year govt rand bonds that fell 9.40 bps to 9.46%.
South Africa finalized a deal to receive 20 million doses of the Covid-19 vaccine produced by Pfizer Inc. and BioNTech SE from mid-April, allowing the country to prepare for a broad roll-out of inoculations after a series of setbacks.

  • South Africa Stocks Rise With Anglo Leading Mining Giants Higher
  • Business Day.za: SARS to target wealthy taxpayers’ R400bn stashed offshore

ECONOMIC DATA:

  • 9:15am: March Standard Bank South Africa PMI, prior 50.2
  • 11:30am: March SACCI Business Confidence, est. 94.0, prior 94.5

EU/UK
European markets closed higher on Tuesday as trading resumes after the Easter holiday, with global sentiment boosted by positive economic data in the U.S. and China. The pan-European Stoxx 600 provisionally ended the session up 0.7%, with basic resources adding 1.8% to lead gains as most sectors entered positive territory. European stocks bucked the trend seen in Asia-Pacific, where markets were mixed Tuesday despite China’s services sector activity growing in March, according to a private sector survey. The big corporate news out of Europe Tuesday was the announcement by Credit Suisse of several high-level staff departures and cuts to its dividends and bonuses. The Swiss bank announced it was taking a $4.7 billion hit as a result of the Archegos Capital Management saga. The Swiss lender now expects a first-quarter pre-tax loss of around 900 million Swiss francs ($960.4 million). Credit Suisse shares were down 0.4% by the market close. In terms of other individual share price movement, Swedish stock brokerage firm Avanza climbed 7.2% to lead the Stoxx 600, while at the opposite end of the benchmark Swiss telecoms firm Swisscom slid 5.1%. Shares of several European food delivery services fell Tuesday as investors questioned whether their pandemic-fueled growth could last as economies begin to reopen. In Britain, Just Eat Takeaway and Ocado fell 1.3% and 0.7% respectively, while in Germany Delivery Hero sank 1.2% and HelloFresh dipped 1.6%.
US
U.S. stocks fell from record levels on Tuesday as the recent rally driven by signs of strong economic rebound took a pause. The Dow Jones Industrial Average dipped 96 points, or 0.3%, to 33,430. The S&P 500 fell 0.1% to 4,073, pressured by tech and health care. The broad equity benchmark fell for the first time in four days. The tech-heavy Nasdaq Composite inched 0.1% lower to 13,698. The blue-chip Dow and the S&P 500 both closed at record highs in the prior session. Shares of airlines and cruise lines continued their recent gains. Delta Air Lines rose 2.8%, while Carnival and Royal Caribbean both gained more than 1%. Norwegian Cruise Line jumped 4.6%. The market came under pressure even after more strong news on the job front. The Labor Department said Tuesday that U.S. job openings rose 268,000 to a two-year high of 7.4 million beating estimates of a total of 7 million. We see a bit of consolidation ahead of 1Q21 earnings, with big banks including JPMorgan and Goldman Sachs kicking off the new earnings season next week. First-quarter earnings are expected to be up 24.2% year over year, compared to 3.8% growth in the fourth quarter, according to Refinitiv.
ASIA
Asia-Pacific markets are trading mostly higher this morning, shares on the Chinese mainland and in Hong Kong lost ground. Australia’s ASX 200 advanced 0.49%, with most sectors trading higher. Major banking stocks reversed earlier losses to trade higher: ANZ shares rose 0.09%, the National Australia Bank added 0.19%, Westpac was up 0.36% while Commonwealth Bank shares advanced 0.58%. In Japan, the Nikkei 225 retraced most of its earlier gains, but still traded fractionally higher. The Topix index rose 0.38%. South Korea’s Kospi added 0.17%, giving up some of its earlier gains. Samsung Electronics shares dipped 0.47% after the chip and smartphone maker issued earnings guidance for the first three months of 2021. Samsung said it estimated operating profit for the quarter at 9.3 trillion Korean won ($8.3 billion), up 44% from a year ago. The company did not give detailed breakdown, which are due at the end of this month. Hong Kong’s Hang Seng index declined 0.65% as the market returned to trade after being closed since Friday. Chinese mainland shares also traded lower: The Shanghai composite was down 0.53% while the Shenzhen component fell 1.14%. Wednesday’s session follows overnight losses on Wall Street, where U.S. stocks fell from record levels.
COMMODITIES
Gold slipped from the highest level in more than a week as the dollar and bond yields steadied, with investors focused on details from the Federal Reserve’s most recent meeting. Spot gold declined 0.3% to $1,738 an ounce. Prices climbed to $1,745 on Tuesday, the highest since March 25. Silver and palladium fell, while platinum rose.
Oil pushed toward $60 a barrel as prospects for faster, vaccine-aided economic growth boosted the outlook for energy demand. West Texas Intermediate rose 0.6% after Tuesday’s 1.2% climb. With vaccines being rolled out at a faster pace, the International Monetary Fund upgraded its global growth forecast to 6% this year. An industry report, meanwhile, showed a decline in American crude stockpiles but a gain in gasoline holdings.
Copper retreated with other metals – after jumping almost 3% in London on Tuesday — amid a lack of clarity on the economic growth outlook. Banks from Citigroup Inc. to Goldman Sachs Group Inc. expect copper to rally past $10,000 a ton in the coming months as global demand improves and supply remains tight. The metal has been trading near $9,000 a ton over the past month. Copper fell 0.5% to $9,005 a ton at 12:23 p.m. in Shanghai after closing at the highest since March 22 on Tuesday. The metal is up around 16% this year. Aluminum, nickel and lead also declined.
The surge in steel futures paused as investors weighed China’s push to curb pollution with signs of robust demand. The world’s biggest steel producer has implemented a slew of measures to rein in the sector’s carbon emissions. In the latest sign of a tougher approach, authorities in the steel- making hub of Tangshan asked mills to conduct comprehensive checks on facilities and procedures to address environmental issues, China Metallurgical News reported Tuesday. Iron ore futures in Singapore rose as much as 1.5% to $164 a ton before trading at $163.25 by 11:27 a.m. local time. Prices in Dalian jumped more than 2%.
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.