Global Stocks Dragged Lower by Risk-Off Mood/Covid Concerns

09/07/2021 Asian shares followed U.S. equities lower Friday on anxiety that the spread of Covid-19 variants could hamper the global economic recovery. MSCI Inc.’s Asia-Pacific stock gauge slid to the lowest since mid-May but came off the day’s low. Economically sensitive sectors such as industrials led the index lower, with equities from Japan to Australia retreating. A Hong Kong gauge of Chinese stocks rebounded after flirting with a bear market amid Beijing’s tech sector clampdown. Tech names have bounced a bit with Tencent up 2.18 %.

Olympics organizers will ban spectators from the upcoming summer games in Tokyo, after a state of emergency in the city was declared by Japan on Thursday as the country sees rising Covid-19 cases. The state of emergency will last till August 22.

Locally it was all a bit of a blood bath as the local market had its worst day since October 2020. The All Share closed down 2.34 %, mining stocks were the big losers as NHM and IMP closed down 8.42 and 7.38 percent respectively. The High Court in Pietermaritzburg is expected to hand down its ruling on former president Jacob Zuma’s application to have his arrest stayed pending the outcome of his application to the Constitutional Court to review its judgment and sentence.

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European markets plunged as the pan-European Stoxx 600 slid nearly 2% yesterday, with retailers dropping 3.2% to lead losses as all sectors and major bourses slid deep into negative territory. The FTSE lost 1.68%, CAC – 2.01% and the DAX 1.73%. European Market futures are flat this morning and later today G-20 finance ministers and central bank governors are meeting in Venice, Italy, to talk about tax and the economic recovery. On the data front, there will be a May flash GDP figure for the U.K. and Bank of England Governor Andrew Bailey will speak at an OECD Global Forum on Productivity.
Overnight in the US the Dow closed the session 259.86 points lower, well off the early session lows. The S&P 500 dipped 0.86% while the Nasdaq broke a four-day win streak by falling 0.72%. Losses came as the proliferation of the highly infectious delta Covid variant also fueled worries about the global economic recovery. Shares of companies tied to the economic comeback weighed on the market Thursday. Major cruise line, airline and home improvement stocks slumped. Chip stocks also dropped and Big Tech names retreated after gaining in previous sessions. The jobless claims report released yesterday also indicated a potential slowdown in the labour sector as first-time applicants for unemployment benefits unexpectedly jumped to 373,000 in the week ending July 3, forecasts were 350,000 initial claims.
In Asia the Nikkei fell nearly 2% before bouncing as Covid worries resurface in region. Olympics organizers will ban spectators from the upcoming summer games in Tokyo, after a state of emergency in the city was declared by Japan on Thursday as the country sees rising Covid-19 cases. The state of emergency will last till August 22. The Nikkei is now down 0.78%, Hang Seng up 1.03% as Tech names rebound. Reuters reported earlier, that the Biden administration is set to add more Chinese firms to its economic blacklist over alleged human rights abuses and high-tech surveillance in Xinjiang. MSCI’s broadest index of Asia-Pacific shares outside Japan traded 0.53% lower.
Gold is set for the third straight weekly gain despite been a tad softer this morning at $ 1800 an ounce. Platinum is 0.25% lower at $ 1076 and Palladium down 0.23% at $ 2800.
Oil prices are slightly firmer after a boost from a drop in U.S. crude and gasoline inventories, but were still set for a weekly decline on concerns that an OPEC+ impasse could swell global crude supplies. Brent is up 0.11% and WTI up 0.22% but both benchmarks are heading for a loss of nearly 3% for the week, as traders remained worried that the collapse of talks within OPEC+.