Global Stock Markets Spooked By U.S. Inflation Scare; S&P 500, tech-heavy Nasdaq 100 declined for third-straight day

13/05/2021 Asian stocks slipped to seven-week lows on Thursday after a concerning rise in U.S. inflation, which rose 4.2% year-on-year vs estimates of 3.6% and the fastest pace of acceleration since September 2008, clubbed Wall Street and sent bond yields surging on worries the Federal Reserve might have to move early on tightening. All regional indices in Asia are under the waterline, with Japan underperforming relative to the rest. The S&P 500 and Nasdaq 100 both shed more than 2% in a third-straight day of losses. U.S Ten-year Treasury yield nears 1.7% as U.S. CPI gain surprises. Gold up 0.10% at $1817.43. Oil eases as investors assess pipeline restart, Brent down 0.92% at $68.68…WTI retreating 0.90% at $65.43.

Locally, the JSE closed 0.3% higher at 67,424.27, after earlier trading as high as 68,402.98, while the Top-40 closed 0.3% up, at 61,529.14. The yield on SA’s benchmark R2030 bond rose 11.50 basis points to 9.08%, the highest closing level in a week. Bond yields move inversely to their prices, it indicated a falling market, which was mirrored in the rand retreating to well above R14/$ – last seen at R14.11/$ this morning. Glencore led the gains among industrial miners, rising 3.16% to R66.66. Kumba Iron Ore added 3% to R717.38, African Rainbow Minerals 2.26%.

Naspers’s share price dipped 1.60% at the close to R3123.88 tracking tech-heavy Nasdaq, the stock rose almost 5% in morning trade on Wednesday, after the company announced its proposal to swap its ordinary Naspers shares with those of consumer internet subsidiary Prosus. This would be the latest move by the company to close the gap between the underlying value of its assets and its market value.

EQUITY PREVIEW:
• South African Stocks Up as Naspers-Prosus Plan Adds to Mining Gains
MEDIA SUMMARIES:
• Business Day.za: Last-minute push to use up J&J shots before national vaccinations kick off
• Moneyweb: Severity of third Covid-19 wave will come down to ‘timing’
ECONOMIC DATA:
• 11:30am: March Mining Production MoM, est. -1.8%, prior 3.8%
• 11:30am: March Mining Production YoY, est. 17.3%, prior 0.8%
• 11:30am: March Gold Production YoY, prior -8.7%
• 11:30am: March Platinum Production YoY, prior -0.9%
GOVERNMENT:
• Annual General Meetings: AMS SJ, LBH SJ, QLT LN

EU/UK/US
European stocks rose led by a charge in energy shares as oil prices hit two-year highs, while strong regional earnings reports offset concerns about inflationary pressures/concerns in the U.S. The pan-European Stoxx 600 index finished up 0.30%, alongside a 0.20% gain for the German Dax to 15,150.22, while the FTSE100 firmed up 0.82% at the close. The European oil & gas index jumped 2.0%, with shares of Royal Dutch Shell, BP, Paris-listed shares of TechnipFMC rising over 3.5% each. German lender Commerzbank jumped 7.7% after it beat expectations for first-quarter profit and raised its revenue outlook.

Wall Street stocks finished in negative territory for yet another session on Wednesday, following the release of April’s consumer price index. At the close, the Dow was down 1.99%, as the S&P 500 lost 2.14%, and the Nasdaq was 2.67% weaker.
The monthly gain was 0.8%, well ahead of the 0.2% advance expected. Base effects were seen as the principal reason for the increase, given that inflation was considerably lower at the same time in 2020. Having said, the Federal Reserve would likely dismiss the current round of numbers as being transitory, and expect inflation to settle to around the 2% being targeted by the central bank later in the year.

Bitcoin slumped as much as 15% to below $50,000 after Elon Musk tweeted that Tesla has suspended vehicle purchases using the digital currency over environmental concerns. He added that Tesla will not be selling any Bitcoin either.

ASIA
China and Hong Kong stocks fell after the former’s latest bank lending data missed forecasts, and as Sino-U.S. tensions weighed. Shanghai Composite slipped 0.81% this a.m, while the Hang Seng was down 0.92% (Tencent on the backfoot 1.67%). Tensions between Beijing and Washington added to the pressure, U.S. State Department official said on Wednesday as the department published a report that criticized China’s treatment of religious minorities.

MSCI’s broadest index of Asia-Pacific shares outside Japan lost 0.6%. Japan’s Nikkei fell 1.77%, and touched its lowest since early January, while Australis blue chips lost 0.76%.