Wacky Wednesday: Global Markets And Futures Drop; Inflation Jitters Boost Yields

12/05/2021 Asian stock markets fell for a second straight session investors speculated surging commodity prices and growing inflationary pressure in the U.S could lead to earlier rate hikes and higher bond yields globally. Wall Street technology stocks were among the biggest losers though Nasdaq managed to reverse the bulk of its early 2% decline over the course of the day. Stocks fluctuated in Hong Kong and slid in Japan. U.S. contracts slipped after the S&P 500 continued its drop from a record high Friday. Oil was steady above $65. Gas stations from Florida to Virginia began running dry and prices at the pump rose on Tuesday, as the shutdown of the biggest U.S. fuel pipeline by hackers extended into a fifth day and sparked panic buying by motorists.

Locally, the JSE tracked weaker global markets falling 1.73% to close at 67,197.23 points . The bourse was heavily weighed down by miners and tech-heavies, with both Naspers and Prosus slipping 1.83% and 3.30% at the close. Precious metals dropped 2.56%, industrial metals 1.93%, listed property 2.16%, industrials 1.75%, banks 0.38% and financials 0.56%. Sibanye-Stillwater relinquished 3.93% to R64.72, Northam Platinum fell 2.80% to R241.30, Gold Fields 2.32% to R146.98, Impala Platinum 2.30% to R261.33, DRD Gold 2.08% to R14.62, AngloGold Ashanti 2% to R312.92 and Royal Bafokeng Platinum 1.83% to R108.

Fitch Ratings said on Tuesday said that the government is unlikely to meet its goal of freezing public-sector salaries for three years. The wage bill has been increasing over the years, escalating from R154bn in 2006/2007 to about R630bn in the past financial year. The unions are demanding a wage increase of CPI plus 4% across the board for 2021/2022 — above the 3.2% inflation rate recorded in March and also higher than the 4.3% average the Reserve Bank expects for 2021.
NEWS:
• South Africa March Manufacturing Rises 4.6% Y/y, Est. +1.1%
• Fitch Sees South Africa Public-Sector Wage Freeze as Unlikely
• Helios to Use $575 Million Oman Deal as Base for Regional Growth
EQUITY PREVIEW:
• Hyprop Offering of Shares Prices at 28 Rand/Share
• Platinum Giants Are Wary of Boosting Supply, Sibanye CEO Says
• Barloworld Sees 1H Basic Heps Increasing by 27% to 48% Y/y
• Sappi Upgraded by Avior as Price Drop Presents Entry Opportunity
• Massmart Jumps; Morgan Stanley Says Stock ‘Severely Undervalued’
• Harmony Gold Lowers Output Guidance After PNG Mine Setbacks
• Pepkor Sees 1H EPS From Continuing Ops Rising 43.6% to 63.6%
MEDIA SUMMARIES:
• Fin24: Covid-19: Move to a stricter lockdown level, experts warn as third wave looms
Ex Div:
• ACT SJ 17cents, AEL SJ 96 cents

EU/UK/US
European stocks retreated on Tuesday with travel, retail and technology shares among the top losers after worries about rising U.S. inflation knocked back U.S. indexes. European tech shares fell 2.15% to their lowest in six weeks, industrials 2.26% and financials pulled back 1.95%. British Airways-owner IAG dropped 5.9% after announcing a convertible bond offering plan worth 800 million euros. The pan-European STOXX 600 index fell 1.97, while the main bourses in Frankfurt and Paris all lost close to 2%. London’s FTSE100 gave up 2.47% on the day. he pullback in European stocks comes after a strong rally, with the STOXX 600 up about 9.42% so far this year.

Wall Street stocks closed lower on Tuesday despite big-name tech stocks staging a late reversal. At the close, the Dow Jones Industrial Average was down 1.36%, while the S&P 500 was 0.87% softer and the Nasdaq Composite saw out the session 0.09% weaker. March’s JOLTs job openings report came in ahead of expectations for a print of 7.5m at 8.12m, according to the Bureau of Labour Statistics. Stock futures dipped after posting back-to-back sessions of losses. All three main gauges, futures, are on the backfoot.

Here are some key events to watch this week:
• U.S. CPI report Wednesday is forecast to show prices continued to increase in April
• Bank of England Governor Andrew Bailey speaks Wednesday

ASIA
MSCI’s broadest index of Asia-Pacific shares outside Japan faltered 0.5%, after tumbling 1.6% on Tuesday. Taiwan may raise its COVID-19 alert level in the coming days, warning of an extremely serious situation on the island which has so far controlled the pandemic well, sending the stock market tanking. – China and Hong Kong shares slipped on Wednesday, dragged down by real estate firms after Beijing held a meeting on property tax to curb rampant speculation in the housing market, although tech stocks rebounded from a sharp drop in the previous session. Hang Seng dipped 0.37%, Shanghai Composite down 0.28%, Australia’s ASX 200 retreating 1.00%, alongside the Nikkei underperforming at 2.17%.