Asian Stock Markets Steady After Fed Reassuring Comments Calms Investors Nerves

23/06/2021 Asia-Pacific stocks were mostly steady on Wednesday morning, with reassuring comments from U.S. Federal Reserve officials on inflation and monetary policy bolstering investor sentiments. Stocks dipped in Japan and Australia, but outperformed in Hong Kong and also edging higher in China. U.S. equity contracts gained after the S&P 500 climbed a second day. The dollar strengthened versus major peers. U.S. Fed. Chair Powell reiterated his view that inflation pressures will be transitory even after a notable increase in recent months. He added that the Fed would be patient in waiting to lift borrowing costs.

U.S. crude inventories fell 7.2 million barrels last week, according to API. WTI futures increase 0.5%, to be trading $73.20, after easing 0.4% on Tuesday. Brent crude gained 0.60% to be trading at $75.25. Gold steady 0.15%, at $1781.50, on the back of positive global cues after U.S. Fed. Chair vowed not to raise interest rates too quickly. Also in focus, bitcoin fell below $30,000 to its lowest level in over five months on the back of intensified efforts to crack down on the cryptocurrency in China.

Here are some events to watch this week:
• U.S. new home sales, current account balance on Wednesday
• EIA crude oil inventory report due Wednesday
• Bank of England interest rate decision Thursday
• The Fed releases Thursday the results of stress tests on the largest U.S. banks

Locally, the JSE closed little changed on Tuesday as investors awaited U.S Fed. Reserve chair Jerome Powell’s testimony before Congress later in the day. Naspers and Prosus led the losses on the local bourse; with Naspers dropping 2.63% to R2,960 – the most in more than six weeks. Prosus fell the most in more than two weeks, losing 2.12% to R1,399.50. The JSE closed flat 0.02% to 65,551.73 points, remaining 10.34% firm YTD, while the Top-40 marginally gained 0.04% at the close. Rand little changed at R14.2750/$, while the Yield on 10-year govt rand bonds fell 0.90 bps to 9.39 %. South African inflation, data due on Wednesday, is expected to accelerate to 5.2% in May – according to a median of economist estimates in a Bloomberg survey, up from 4.4% the previous month.

NEWS:
• Covid-19 Cases Surge to Record in South African Economic Hub
• South Africa Reorganizes Ports Structure to Boost Efficiency
• Goldman Zeroes In on Millennial Spending With South African Fund
EARNINGS:
• Brait (BAT SJ), FY
EX DIV:
• BAW SJ, MRP SJ, PFB SJ, RLO SJ, SYG SJ, VOD SJ, VUN SJ
ECONOMIC DATA:
• 10am: May CPI MoM, est. 0.1%, prior 0.7%
• 10am: May CPI Core YoY, est. 3.2%, prior 3.0%
• 10am: May CPI Core MoM, est. 0%, prior 0.3%
GOVERNMENT:
• ANC officials to meet with EFF officials in a closed meeting to discuss impasse over the expropriation of land without compensation
• South African government presents cannabis master plan to National Economic Development & Labour Council

EU/UK/US
European stock markets finished mostly higher on Tuesday and at their best levels of the session, helped by positive comments from the ECB chief and the continuing advance on Wall Street. Christine Lagarde, said on Monday that the Eurozone and the US were “clearly in a different situation”. The pan-European Stoxx 600 was ahead 0.37% , alongside a rise of 0.29% on the German Dax. London’s FTSE100 up 0.39% and Paris’ CAC-40 saw out the session .014% firmer. Commercial landlords British Land and Land Securities rallied 4.72% and 3.19%, respectively, after an upgrade to ‘overweight’ from ‘neutral’ at JPMorgan, which argued that UK retail was turning a corner.

Wall Street stocks closed higher after the Dow turned in its best performance since March a day earlier. At the close, the Dow was up 0.20%, while the S&P 500 was 0.51% firmer and the Nasdaq saw out session 0.79% stronger. Existing home sales fell 0.9% in May to a seasonally adjusted annual rate of 5.80m, according to the National Association of Realtors, a fourth straight monthly decline as low inventory pushed out many potential buyers and builders were unable to deliver houses due to an increase in the expensive of lumber. U.S. index futures all pointing upwards.

ASIA
Japan’s benchmark Nikkei index inched higher on Wednesday as a rally in consumer-related growth stocks outweighed losses in transport sectors.The Nikkei 225 rose 0.07%, Nitori Holdings rose after local media reported that the home improvement goods and furniture store operator would post a record operating profit for the quarter ended May, driven by robust demand for its products amid the pandemic. Australian shares slipped after posting their best session in nearly four months, as gold and energy stocks lost ground after underlying commodity prices fell overnight. The ASX 200 index declined 0.44%. Hong Kong’s Hang Seng advanced 1.46%, mainly driven by the Healthcare and IT sectors, while the CSI300 gained 0.77%