Asian Stocks Steady; Oil Slips Amid OPEC+ Dispute

05/07/2021 Asian stocks were steady Monday after U.S. equities extended a rally on speculation the Federal Reserve has scope to continue providing substantial stimulus support. Oil dipped amid OPEC+ tension. Shares slipped in Japan and Hong Kong, and fluctuated in China, where cybersecurity probes into ride-hailing giant Didi Chuxing as well as some other online platforms highlighted Beijing’s push to curb the influence of the nation’s internet companies. Chinese technology firms fell in Hong Kong. Tencent shares fell 3.9% while Alibaba dropped 2.3% and Meituan slipped 5.4%. The S&P 500 reached a record for a seventh day Friday after a U.S. jobs report signaled the economy is gaining steam but not at a pace that would prompt the central bank to taper stimulus quickly. U.S. equity contracts edged down. U.S. stock and bond markets are closed for the July 4 Independence Day holiday. Oil was around $75 a barrel amid an OPEC+ dispute. The standoff between Saudi Arabia and the United Arab Emirates leaves the global economy guessing how much oil it will get next month. The JSE Top 40 futures opened lower, down 240 points or 0.4%, with the Rand stronger, last at 14.22 vs the USD.
Here are some events to watch this week:

  • Reserve Bank of Australia policy decision Tuesday
  • FOMC minutes Wednesday
  • The Group of 20 finance ministers and central bankers meet in Venice on Friday
  • China PPI and CPI data released on Friday
    The FTSE/JSE Africa All-Share Index down 0.3% to 66,323.76. The Rand was up 1.3% to 14.25 per US$, with the Yield on 10-year govt rand bonds that fell 2 bps to 9.3%.
    South Africa’s top court agreed to hear an application by former President Jacob Zuma to have his conviction on contempt charges and 15-month sentence set aside.
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  • As the Rich World Moves On, Africans Face Repeated Virus Waves
  • South Africa Approves Sinovac’s Covid-19 Vaccine
  • Beginning of the End of Easy Money: Central Bank Quarterly Guide
  • Qatar to Buy South African Oil-Block Stakes From TotalEnergies
  • Richemont Raised to Reduce at AlphaValue
  • Sibanye to Redeem Its $353.7m June 2022 Bonds on Aug. 2
  • MTN Eswatini Seeks to Restore Services After State Shut It Down
  • Anglo American Raised to Outperform at Bernstein; PT 3,510 pence
    MEDIA SUMMARIES:
  • Business Day.za: Lindiwe Zulu asks Treasury to extend Covid-19 relief grant
  • Gupta in Talks With Glencore to Refinance Over $500M in Debt: FT
  • News24: VBS saga: Indictment details ‘corrupt gratifications’ driving illegal municipal investments in doomed bank
  • Daily Maverick: SA Passport Bid: Home Affairs tells ‘fugitive’ Atul Gupta to take a hike
  • Business Day.za: Northam expects a bumper year as it harvests a R4bn capital injection
  • Fin24: EXCLUSIVE: Leaked Steinhoff letter shows how key directors backed Jooste, ‘totally aware of risks’

ECONOMIC DATA:

  • 9:15am: June Standard Bank South Africa PMI, prior 53.2

EU/UK
European stocks closed slightly higher on Friday as investors digested a better-than-expected U.S. jobs report. The pan-European Stoxx 600 provisionally closed up over 0.2%, with travel and leisure stocks climbing 1.6% to lead gains, while banks fell 1.2%. The tepid trade in Europe follows a mixed session in Asia-Pacific, where mainland Chinese and Hong Kong stocks pulled back sharply while other major markets made modest gains. Stateside, stocks rose at the open and the S&P 500 hit another record high after the June jobs report showed an accelerating recovery for the U.S. labor market. Euro zone producer prices gathered pace in May on the back of rising energy prices, Eurostat revealed on Friday. Factory gate prices across the 19-member common currency bloc rose 1.3% month-on-month and 9.6% year-on-year. On Thursday, following two days of talks, 130 countries pledged support for the U.S. proposal of a global minimum corporate tax of 15%. In corporate news, Spain’s Caixabank on Thursday announced that it would lay off 6,452 employees in the biggest staff overhaul in the history of the Spanish banking sector. Meanwhile U.S. activist hedge fund Elliott is urging GlaxoSmithKline to review its leadership and consider selling some of its consumer healthcare business, having built up a considerable stake in the British pharmaceutical giant. In terms of individual share price movement on Friday, British food delivery firm Deliveroo rose 6.7% to the top of the Stoxx 600 after agreeing to extend a partnership with French supermarket group Casino for two years. Maltese online gambling operator Kindred Group climbed 6.2% after announcing the acquisition of Relax Gaming. At the bottom of the European blue chip index, Danish hospital equipment manufacturer Ambu plunged 9.2% after revising down its full-year profit guidance.
US
Stocks rose on Friday and the S&P 500 hit another record high after the June jobs report showed an accelerating recovery for the U.S. labor market. The broad market index rose 0.75% to 4,352.34, while the tech-heavy Nasdaq Composite climbed 0.81% to notch its own record at 14,639.33. The Dow Jones Industrial Average added 152.82 points to close at 34,786.35. The S&P 500 has now risen for seven consecutive sessions, its longest winning streak since August. Solid moves by major tech stocks helped support the overall market on Friday, with shares of Apple and Salesforce rising by nearly 2% and 1.3%, respectively. Microsoft jumped 2.2%. For the week, the Nasdaq Composite rose nearly 2%, while the S&P 500 and Dow climbed 1.7% and 1%, respectively. Several sectors closed at record levels on Friday, including tech and health care. The strong week on Wall Street was spurred by a string of solid economic reports, capped by a better-than-expected jobs report on Friday morning. The economy added 850,000 jobs last month, according to the Bureau of Labor Statistics. Economists surveyed by Dow Jones were expecting an addition of 706,000. The print topped the revised 583,000 jobs created in May. In addition to the job gains, average hourly wages rose 0.3% for the month and are up 3.6% year over year, matching expectations. On Friday, shares of Boeing fell 1.3%, weighing on the Dow, after a 737 cargo plane made an emergency landing off the coast of Honolulu. IBM’s stock fell 4.6% after the company announced that president and former Red Hat CEO Jim Whitehurst was stepping down. The U.S. markets will be closed on Monday for the July 4 holiday.
ASIA
Asia markets mixed; China tech shares in Hong Kong fall after Didi app suspension. Shares in Asia-Pacific were mixed in Monday trade as Brent crude futures hovered around $76 ahead of another meeting between OPEC and its allies. Tech shares in Asia were mostly lower. Shares of Chinese tech firms in Hong Kong fell in Monday trade as regulatory fears resurfaced. By Monday afternoon in Hong Kong, Tencent shares fell 3.92% while Alibaba dropped 2.36% and Meituan slipped 5.46%. The broader Hang Seng TECH index in Hong Kong also declined 2.23%. Stocks of Japanese conglomerate SoftBank Group also plunged 5.04% in Monday afternoon trade. The losses came after Chinese regulators claimed SoftBank-backed Didi illegally collected users’ personal data and ordered app stores to stop offering Didi’s app. The move came just days after the ride-hailing giant’s market debut on the New York Stock Exchange. “The app can no longer be downloaded in China, although existing users who had previously downloaded and installed the app on their phones prior to the takedown may continue using it,” Didi said in a Sunday release. The company had earlier announced Friday that it had suspended new user registration in China. The S&P/ASX 200 in Australia rose about 0.1%. Australia’s retail sales data rose 0.4% in May on a seasonally adjusted basis, final retail trade figures released Monday by the Australian Bureau of Statistics showed. That was higher than the May preliminary result of a 0.1% rise. Mainland Chinese stocks edged higher as the Shanghai composite rose 0.16% while the Shenzhen component hovered above the flatline. Hong Kong’s Hang Seng index fell 0.45%. A private survey on China’s services sector activity in June showed growth slowing sharply in June to a 14-month low. The Caixin/Markit services Purchasing Managers’ Index for June, released Monday, came in at 50.3 — a significant decline from May’s reading of 55.1. Still, it held above the 50-level in PMI readings indicating growth on a monthly basis. In Japan, the Nikkei 225 slipped 0.55% while the Topix index shed 0.26%. South Korea’s Kospi climbed 0.38%. MSCI’s broadest index of Asia-Pacific shares outside Japan edged 0.1% higher.
COMMODITIES
Gold Regains Shine After Central Bank Buying Drops to Decade Low. Central banks may be regaining their appetite for buying gold after staying on the sidelines for the past year. Central banks from Serbia to Thailand have been adding to gold holdings and Ghana recently announced plans for purchases, as the specter of accelerating inflation looms and a recovery in global trade provides the firepower to make purchases. The precious metal was little changed Monday at $1,787.78 an ounce by 6:35 a.m. London time.
Brent oil was steady near $76 a barrel ahead of another round of critical OPEC+ discussions to break a stalemate over raising production, with tension rising over the weekend between two long-time allies. Talks are set to resume later Monday after ending Friday without an agreement due to demands from the United Arab Emirates for better terms for itself. Most OPEC+ members backed a proposal to increase output by 400,000 barrels a day each month from August, and push back the expiry of the broader supply deal into late 2022. The UAE, however, is seeking to change the baseline that’s used to calculate its quota, a move that could allow it to boost daily production an extra 700,000 barrels. It’s also refusing to back an extension of the pact.
Prices of copper, often used as a gauge of global economic health, advanced on Monday on hopes of stronger demand for metals and amid a sustained U.S. economic recovery after data showed an acceleration in hiring in the world’s biggest economy. Three-month copper on the London Metal Exchange was up 0.5% at $9,427.50 a ton.
Iron ore rose as investors weighed the demand outlook in China after mills began to resume production and its key steel-making city started planned output restrictions. Iron ore futures in Singapore rose 1.8% to $207.30 a ton by 11:19 a.m. local time, after sliding 3.7% last week, while contracts in Dalian rose 2%. Rebar and hot-rolled coil futures in Shanghai also climbed.