Asian Shares Step Back From Two-Week Highs, Futures Dip.

27/05/2021 Asian stocks were mixed and U.S. futures dipped Thursday as investors weigh the possibility of a reduction in stimulus. The dollar held at a one-week top; dollar index at 90.152. Wall Street, all three main indeces, closed higher driven by consumer discretionary, communication services and financial sectors. Equities fell in Japan and Hong Kong. China and U.S. held the first trade talks since the election of President Joe Biden and acknowledged the importance of the bilateral trade relationship. The White House’s top official for Asia said Wednesday the U.S. is entering a period of intense competition with China. In commodities, gold prices fell below $1,900 per ounce dimmed by a rebounding dollar and U.S. Treasury yields.
Spot gold flat 0.04% to $1,897.48 per ounce after hitting its highest since Jan. 8 at $1,912.50. Oil prices were weaker too, with Brent off 45 cents at $68.42 a barrel and U.S. crude down 36 cents at $66.85 a barrel – optimism on the summer driving season in the United States and Europe offset concerns about demand in India and a potential supply increase from Iran. Bitcoin retreated back below $40,000.

The JSE closed flat 0.05% at 66,108.23 and the Top-40 marginally slipping 0.02%. Miners weighed on the blue-chip Top-40, while Mediclinic jumped the most after it announced an uptick in patient activity and that it would vote to sell its shares in UK business Spire Healthcare. SA’s largest hospital group decided to hold on to its final dividend after revenue fell 3% in the year to end-March. Its shares rose 5.39% to R63.70. Kumba Iron Ore was the biggest loser in the market as iron ore prices continued to pull back from their recent peak. Its shares fell the most in more than two months, down 4.71% to R600.52. Precious metals were down 1.4% and resources 1.04%. Banks added 0.83% and financials 0.58%. The rand strengthened a fifth day, buoyed by portfolio flows after non-residents splurged on the country’s government debt. Foreigners were net buyers of 3.7 billion rand ($270 million) of South African bonds on Tuesday, according to JSE Ltd. data. The local currency is steady at R13.7525/$ this morning. Top-40 futures on the backfoot 110points on IG markets. We’re likely to open softer on Thursday morning.

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• Afrimat Ltd. (AFT SJ)
• Pepkor Holdings Ltd. (PPH SJ)
• 11:30am: April PPI YoY, est. 6.7%, prior 5.2%
• 11:30am: April PPI MoM, est. 0.9%, prior 1.3%
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• South Africa’s Special Investigating Unit holds a media briefing about a report it’s compiled on an investigation into corruption associated with PPE tenders during the Covid-19 crisis
• Annual General Meetings: ADH SJ, SBK SJ

European stocks ended flat led by bank shares after central bank policymakers pledged to keep monetary policy loose despite recent signs of an uptick in inflation. The pan-European Stoxx-600ended the day flat 0.00% at 445.22, as Germany’s Dax dipped 0.09%, London’s FTSE on the backfoot 0.04%, while the Cac-40 was up by 0.02%. Food and clothing retailer Marks & Spencer gained 8.5% despite saying it swung to a heavy full-year loss as it felt the full impact of the coronavirus pandemic. Spire Healthcare jumped 26.94% after agreeing to be bought by Australia’s Ramsay Health Care for just under £1bn.

Wall Street edged higher and technology shares’ recovery continued for a third day as inflation concerns ease. The Dow was up 0.03%, while the S&P 500 was 0.19% stronger and the Nasdaq saw out the session 0.59% firmer. Ford stock accelerated gains after the automotive giant vowed to increase its investment in electric vehicles by $30.0bn through 2025. Mortgage applications declined 4.2% in May, according to the Mortgage Bankers Association, a marked turnaround from the prior month’s 1.2% increase. The average rate for 30-year fixed-rate mortgages increased to 3.18% from 3.15%. Futures dip ahead of jobless claims data. All three main indices are below the watermark this morning.

Here are some events this week:
• U.S. initial jobless claims, GDP, durable goods, pending home sales on Thursday.

Japanese shares retreated on as investors trimmed their positions after a recent rally, while uncertainties about possible extension of COVID-19 emergency measures weighed on sentiment. The Nikkei share average fell 0.69%. MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.5% at 691.76, still not too far from Wednesday’s high of 696.76. Hang Seng on the backfoot 0.30%, with Tencent dipping 2.01%. Australia’s ASX200 marginally up 0.32%, help up by gains in the communication services at 0.58% and materials sector 1.02%. Shanghai composite 0.18% firmer.