Stocks, Equity Futures Slide on Inflation Concerns

19/05/2021 Stocks in Asia declined with U.S. and European equity futures lower this morning as concern about faster inflation overshadowed the economic recovery from the pandemic. A dollar gauge traded near the lowest level this year. Australia underperformed, with the benchmark on track for its worst day in almost three months. Shares also fell in Japan and China after key U.S. equity benchmarks closed lower and large technology stocks like Inc. and Microsoft Corp. erased gains. AT&T Inc. plunged after the company said it plans to spin off its media operations. S&P 500 and Nasdaq 100 futures were in the red along with European contracts. A slide in crude on the possibility of more supply from Iran hurt energy stocks. Treasury yields were steady. Bitcoin and other cryptocurrencies extended a retreat after the People’s Bank of China conveyed a statement reiterating that digital tokens can’t be used as a form of payment. Markets are closed Wednesday in Hong Kong and South Korea for holidays. IG markets calling us down 600 points, with the Rand steady around the 14.00 level vs the USD.
Here are some key events this week:

  • The Fed publishes minutes from its April meeting Wednesday, which may provide clues to officials’ views on the recovery and how they define “transitory” when it comes to inflation
  • EIA crude oil inventory report Wednesday
  • St. Louis Fed President James Bullard and Atlanta Fed President Raphael Bostic to speak at separate events Wednesday
  • IMF Managing Director Kristalina Georgieva and ECB President Christine Lagarde speak at the Vienna Economic Dialogue Thursday
  • Euro-area finance ministers and central bank chiefs hold an informal meeting. A larger group of EU finance ministers and central bank chiefs will meet May 22
    The FTSE/JSE Africa All-Share Index closed little changed at 67,254, with the Precious Metals & Mining Index. Retailers and Financials that ended the session in positive territory. Naspers and Prosus weighed, with Sasol also closing negative. The Rand was up 0.8% to 13.98 per US$ , with the Yield on 10-year govt rand bonds that fell 3.60 bps to 9.49%
    South African inflation is expected to accelerate to 4.3% in April largely due to base effects, according to a median of 18 economists’ estimates in a Bloomberg survey.
  • NEWS
  • South Africa Holds Firm on Stance to Freeze Public-Sector Pay
  • Moody’s ‘Could Downgrade’ If S. Africa Growth Remains Very Weak
  • Vodacom to Offer Africa’s First Super-App Alongside Alibaba
  • South Africa to Tackle ‘Injustice’ of Excessive Executive Pay
  • Lesotho Faces Having Assets Seized After Solar Contract Breach
  • Glencore Says Cobalt Like Fuel Cost for Electric Vehicle Drivers
  • South Africa Telkom at Three Month High After Trading Statement
  • Spar Sees 1H EPS-Ex Items Climbing 47% to 57% y/y
  • Heineken Acquisition of Parts of Distell Makes Sense: Bernstein
  • Prosus Cumulatively Buys 13.18m Naspers Shares as at May 14
  • Astral Foods Cut to Hold at SBG Securities; PT 155 rand
  • Vodacom FY Net Income 16.58B Rand Vs. 15.94B Rand Y/y
  • Soaring Miners Help South African Stocks to Outrun Peers


  • Ninety One Plc (N91 LN)
  • RFG Holdings Ltd. (RFG SJ)


  • 10am: April CPI Core YoY, est. 2.8%, prior 2.5%
  • 10am: April CPI YoY, est. 4.3%, prior 3.2%
  • 10am: April CPI MoM, est. 0.5%, prior 0.7%
  • 10am: April CPI Core MoM, est. 0.1%, prior 0.5%
  • 1pm: March Retail Sales Constant YoY, est. 2.5%, prior 2.3%
  • 1pm: March South Africa Retail Sales Co, est. -0.2%, prior 6.9%


  • Lawmakers to conduct public hearings on the Pension Funds Amendment Bill
  • Lawmakers to debate the budget vote of the department of planning, monitoring and evaluation that is located within the office of the president
  • Judicial inquiry into state corruption continues in Johannesburg

European stocks closed higher on Tuesday as global markets attempted to break out from the gloomy sentiment seen at the start of the trading week. The pan-European Stoxx 600 ended the session up by about 0.2%, with travel and leisure shares adding 1.6% to lead gains while telecoms dropped 1.2% on the back of post-earnings falls for Iliad and Vodafone. The day’s trading indicated a more positive tone than on Monday, when stocks closed lower as global investors weighed concerns over a rise in inflation and an increase in coronavirus cases, largely attributed to the spread of a variant that emerged in India. Euro zone gross domestic product (GDP) declined by 0.6% in the first quarter, according to Eurostat data published Tuesday, in line with initial estimates and confirming that the 19-member bloc entered a technical recession to start the year. Flash first-quarter employment figures also showed a 0.3% quarterly decline across the euro zone, while U.K. unemployment fell to 4.8% between January and March as employers seemingly prepared for the easing of restrictions. Better-than-expected earnings from Home Depot and Walmart helped support sentiment. arnings in Europe came from Engie, Homeserve, Imperial Brands and Vodafone on Tuesday. Vodafone missed expectations to report a 1.2% drop in full-year adjusted earnings, sending the British telecoms company’s shares tumbling 8.9%.
Major U.S. stock indexes wiped out earlier gains and closed at their session lows on Tuesday as Big Tech stocks reversed lower, while data showing housing starts dropped sharply last month also weighed on sentiment. The Dow Jones Industrial Average ended the session 267 points, or 0.8%, to 34,060. The S&P 500 fell 0.9% to 4,127. The tech-heavy Nasdaq Composite erased a 0.8% gain and slid 0.6% to 13,303 as Apple, Amazon, Facebook and Alphabet all rolled over and fell more than 1% on the day. Housing starts tumbled 9.5% to a seasonally adjusted annual rate of 1.569 million units last month, the Commerce Department said on Tuesday. Economists polled by Dow Jones had forecast starts falling to a rate of 1.7 million units in April. Investors also digested better-than-expected earnings from big retailers. Walmart shares jumped more than 2% after reporting strong grocery sales and e-commerce growth for the quarter. Macy’s posted a surprise profit and hiked its full-year outlook, but its shares erased earlier gains and dipped 0.4%. Home Depot reported earnings of $3.86 a share for the previous quarter, much higher than the $3.08 expected by analysts polled by Refinitiv. Net sales surged 32.7%, more than expected. The stock ended the session 1% lower.
Stocks in Asia-Pacific slipped in Wednesday morning trade, with some markets in the region closed for holidays. Australia’s S&P/ASX 200 led losses among the region’s major markets as it dropped 1.64%. Mainland Chinese stocks were also lower, with the Shanghai composite down 0.49% while the Shenzhen component dipped 0.387%. The Nikkei 225 in Japan fell 0.97% while the Topix index slipped 0.49%. MSCI’s broadest index of Asia-Pacific shares outside Japan traded 0.38% lower. In corporate developments, shares of Singapore Airlines were down about 2% in Wednesday morning trade, with the firm set to announce its full-year results later in the day. Markets in Hong Kong and South Korea are closed on Wednesday for holidays.
Gold steadied near the highest level in more than three months as investors awaited the release of minutes from the Federal Reserve’s meeting in April for a further steer on its views on the economy and inflation. Spot gold was little changed at $1,868 an ounce in Singapore. Prices climbed to $1,875.10 on Tuesday, the highest since Jan. 29. Silver and platinum fell, while palladium rose.
Oil headed for a back-to-back loss after an industry report showed a rise in U.S. crude stockpiles and traders tracked talks between world powers on a revival of the Iran nuclear deal. West Texas Intermediate for June delivery tumbled 1.1%, while global benchmark Brent — which topped $70 a barrel briefly in early Tuesday trade — also declined.
Zinc fell 1% to $3,026 a ton on the London Metal Exchange as of 11:50 a.m. Shanghai time. The metal posted its best close since June 2018 on Tuesday. Copper fell 0.8%, while aluminum slumped 1.3%
Iron ore futures in Singapore halted a two- day rebound as Chinese steel prices extended declines amid further government curbs and BHP Group prepares to start one of the world’s biggest new mines. The futures in Singapore fell 5.4% to $202.55 a ton, while futures on China’s Dalian exchange dropped 4.4%.