Stocks Slip, U.S. Futures Pare Gains; Dollar Climbs

08/06/2021 A number of Asian stock markets slipped this morning as investors await more clues on whether the recovery from the pandemic will stoke price pressures and imperil loose monetary policy. The dollar climbed. Shares from Japan to Hong Kong pared or reversed gains. U.S. futures gave back earlier advances, leaving S&P 500 contracts flat and those on the Nasdaq 100 slightly higher, with European futures pointing lower. The S&P 500 was steady near a record overnight, while a rally in Biogen Inc. on approval of its Alzheimer’s drug lifted the Nasdaq 100. Ten-year U.S. Treasury yields dipped. Traders are awaiting the U.S. inflation report to assess price pressures and expectations that the Federal Reserve is getting closer to starting discussions about tapering asset purchases. Oil extended a decline, losing some momentum after hitting $70 a barrel in New York for the first time in over two years. Digital tokens including Bitcoin retreated, with the Bloomberg Galaxy Crypto Index shedding as much as 10%. Tencent trades flat to slightly lower in HK. The JSE Top 40 futures are indicating a flat start, with the Rand weaker at 13.56 vs the USD.
Here are key events to watch this week:

  • Apple holds its annual Worldwide Developers Conference (WWDC) virtually for a second year, to announce new hardware and software and work with developers. Through June 11.
  • European Central Bank decision on Thursday and press conference with President Christine Lagarde.
  • Iran nuclear deal talks reconvene in Vienna Thursday.
  • U.S. consumer price index on Thursday.
  • Group of Seven leaders’ summit starts in Cornwall, England Friday.
    The FTSE/JSE Africa All-Share Index closed down 0.4% to 67,575, mostly weighed down by retailers and resources with the indexes shedding 2.2% and 1.1% respectively. Naspers and Prosus were also lower with both counters losing over 1%. Banks managed to eked out a gain after a solid trading statement. The Rand was down 0.6% to 13.51 per US$, with the Yield on 10-year govt rand bonds that fell 6bps to 9.08%.
    Data will probably show the South African economy expanded an annualized 3.2% in the three months through March from the previous quarter, according to the median estimate of 16 economists in a Bloomberg survey. Statistics South Africa releases the data at 11:30am in the capital, Pretoria.
  • NEWS:
  • Renaissance Capital to Exit South Africa Cash Equities Business
  • Rand Pauses After Run to February 2019 High: Inside South Africa
  • S. Africa SARB Govt Bond Holdings Rise to 41.6b Rand in May
  • Steinhoff Says Lancaster Requests Have All Been Withdrawn
  • S. Africa’s Denel in Liquidation Challenge by Saab Grintek: eNCA
  • South Africa Allocates 500,000 Vaccines to Teachers, Union Says
  • Impala Bond Repurchases Amount to ZAR8.8b; 49% of Issuance
  • Thungela Opens at ZAR25 in Johannesburg Trading Debut
  • Anglo American CompletesDemerger of Thungela Thermal Coal Unit
  • FirstRand Sees FY HEPS & Normalized EPS Up More Than 35% y/y


  • 11:30am: 1Q GDP Annualized QoQ, est. 3.2%, prior 6.3%
  • 11:30am: 1Q GDP YoY, est. -3.0%, prior -4.1%


  • President Cyril Ramaphosa to address African leaders on climate change in his capacity as the coordinator of the Committee of African Heads of State and Government on Climate Change.


  • 11am: South Africa to Sell 1.3 Billion Rand of 8.25% 2032 Bonds
  • 11am: South Africa to Sell 1.3 Billion Rand of 7% 2031 Bonds
  • 11am: South Africa to Sell 1.3 Billion Rand of 8.5% 2037 Bonds


  • Sales Results: BATS LN
    European stocks closed slightly higher Monday, despite fears over rising inflation. The pan-European Stoxx 600 index ended the session up about 0.2%. Autos shares were the best performers, climbing 0.9%, while basic resources were the laggards, slipping 1.6%. Investors around the world are looking ahead to the release of key U.S. inflation data on Thursday. In April, the Consumer Price Index (CPI) rose 4.2% from the previous year, the fastest increase since 2008. Investors around the world will be assessing the ramifications of the G-7 nations reaching an agreement on global tax reform, calling for the world’s largest corporations to pay at least a 15% tax on their earnings. That’s lower than the Biden administration’s initial suggestion of a minimum 21% tax rate, which didn’t garner much enthusiasm in other countries. Major companies including Facebook and Google have responded favorably to the agreement. Looking at individual stocks, shared office provider IWG sank over 10% to the bottom of the Stoxx 600, having fallen as much as 16% earlier in the day after warning of a sharp drop in profits due to the emergence of new Covid variants.
    The S&P 500 fell slightly on Monday as the benchmark struggled to make a run at a record high after a winning week. The broad equity benchmark dipped about 0.1% to 4,226, sitting 0.3% from its intraday record high earlier in May. Materials and industrials were the biggest losing sectors on Monday, weighing on the S&P 500. The Dow Jones Industrial Average fell 126 points, or 0.4%, to 34,630. The Nasdaq Composite eked out a 0.5% gain at 13,881. Meme stocks were back in the spotlight again this week. AMC rallied as much as 25% on Monday and closed nearly 15% higher, while GameStop and BlackBerry also popped double digits. Most of these speculative stocks slid into the red last Friday — despite massive gains — after volatile trading. Visa shares gained slightly on Monday following an upgrade by Piper Sandler. Investors are focused on inflation data in the week ahead, with May’s Consumer Price Index (CPI) scheduled to be released Thursday. In April the CPI rose 4.2% from the previous year, the fastest increase since 2008. If prices continue to rise it could cause the Federal Reserve to step back from its easy policies.
    Shares in Asia-Pacific were mostly lower in Tuesday afternoon trade, as investors reacted to the release of Japan’s revised first-quarter gross domestic product figures. The Nikkei 225 in Japan shed 0.19% while the Topix index traded about 0.1% higher. Revised government data released Tuesday showed Japan’s economy shrank 3.9% in the first quarter, an improvement from the initial estimate of a 5.1% contraction. The revised gross domestic product compared against economists’ median forecast in a Reuters poll for a 4.8% contraction. Mainland Chinese stocks declined by Tuesday afternoon, with the Shanghai composite declining 0.51% while the Shenzhen component fell 0.8%. Over in Hong Kong, the Hang Seng index dipped 0.35%. Elsewhere, South Korea’s Kospi sat below the flatline. The S&P/ASX 200 in Australia edged about 0.1% lower. MSCI’s broadest index of Asia-Pacific shares slipped 0.26%.
    Gold held gains as investors awaited a key U.S. inflation report due later this week for clues on when the Federal Reserve may begin to talk about tapering its asset purchases. Bullion steadied on Tuesday after rising 1.5% over the past two days as traders assessed a smaller-than-expected gain in U.S. payrolls as well as comments from Treasury Secretary Janet Yellen saying that higher interest rates would be a “plus” for America and the Fed, which weighed on the dollar. Spot gold retreated 0.2% to $1,895 an ounce in Singapore. Prices climbed to $1,916 last week, the highest intraday level since Jan. 8. Silver and platinum fell, while palladium was steady.
    Oil extended declines in Asian trading after a rally that saw it hit $70 a barrel for the first time since October 2018. Futures in New York dropped back below $69 a barrel on Tuesday after closing 0.6% lower in the previous session. While prices have eased, there’s confidence in the demand outlook as vaccination rates accelerate and mobility climbs. BP Plc is predicting a strong recovery, and traffic in a number of European cities was as busy as in 2019 for the first time since the pandemic.
    Copper rose for the second time in three sessions as investors assess signs of a demand pickup in China amid mine supply risks in South America. Supply issues are in focus pending the outcome of Peru’s presidential election, and a slew of wage negotiations in Chile raise concerns over supply disruptions in the short term. Copper on the London Metal Exchange rose 0.2% to $9,924 a ton. Zinc also rose, while nickel declined.
    Iron ore futures edged higher in Singapore as investors weighed the prospects of steel restrictions in China and the risks of higher supplies from top shippers. Investors are examining the sustainability of steel demand in China as the nation seeks to balance its goals of cutting emissions and clamping down on surging prices. Meanwhile, exports of iron ore in Brazil jumped to 2.17 million tons a day in the first three days of June, compared with a daily average of 1.27 million tons in May. Futures in Singapore rose 0.6% to $195.05 a ton at 11:45 a.m. local time, while contracts in Dalian rose 1.6%. Rebar and hot-rolled coil were steady in Shanghai.