19/07/2021 Asian stocks, U.S. futures and European contracts are all lower this morning on concerns about the impact of Covid-19 outbreaks and elevated inflation on economic prospects. Treasuries edged up and oil slipped after an OPEC+ supply deal. MSCI Inc.’s gauge of Asia Pacific shares hit a one-week low, with Japan and Hong Kong underperforming and technology stocks struggling. European, S&P 500 and Nasdaq 100 futures dropped after the S&P 500 fell for the first week in four. The rally in Treasuries continued, sending 10-year yields further below 1.3%. Oil declined after OPEC+ agreed to boost production into 2022, resolving an internal dispute that had shaken the alliance. The yen advanced and the dollar was steady amid cautious sentiment. A global rally in equities has paused as investors consider whether price pressures will sap the economic rebound from the pandemic, in part by leading central banks to pare monetary policy support. Investors are also trying to make sense of the decline in Treasury yields. For some, the trend is a signal of cracks in the global recovery as the delta Covid-19 variant forces some nations to impose virus curbs, while for others the bond rally may have gone too far. Commodity prices are lower across the board, with resource stocks in Australia all on the backfoot, with Tencent 2.7% lower in HK. The Rand is weaker at 14.45 vs the USD. We are in for a negative start to the week, with the FTSE JSE Top 40 futures that is 625 points or 1.04% lower.
Here are some key events to watch this week:
- Reserve Bank of Australia meeting minutes Tuesday
- European Central Bank rate decision Thursday
- Bank Indonesia rate decision Thursday
- U.S. existing home sales Thursday
- The Tokyo Summer Olympics begin Friday
The FTSE/JSE Africa All-Share Index closed down 1.5% to 66,529, with the resource sector weighing the most, closing down 3.4%, with platinum counters Impala, Northam and Amplats shedding 5%, 4.9% and 4.5% respectively. The Rand was up 1% to 14.43 per $, with the Yield on 10-year govt rand bonds that fell 1.9bps to 9.32%.
The criminal case involving corruption, money laundering and racketeering charges against former President Jacob Zuma and arms manufacturer Thales SA will resume at 10am in the Pietermaritzburg High Court in a virtual hearing.
- S. African Stocks Pare Weekly Gain After Days of Protests
- Protest Violence Eases in South Africa as Mop-Up Gets Under Way
- Steinhoff Improves Offer to Legal Claimants by Almost a Third
- S. Africa Plans to Present 2021 Medium-Term Budget in November
- Growthpoint Will Not Accept CPI, Aroundtown’s Globalworth Offer
- Harmony Gold Reports Fatality at Tshepong South Mine
- Pepkor Ops Impacted Civil Unrest; 9% of Stores Damaged & Looted
- Foschini Says About 190 South African Stores Looted, Damaged
- Richemont Fails to Give Luxury a Further Boost: Street Wrap
- Massmart Loses Goods From 41 Stores With Four Facilities Burnt
- Ninety One’s Assets Under Management 139b Pounds as at June 30
- Daily Maverick: Age of Anarchy Aftermath: Fish and marine creatures in mass die-off after arson attacks on KZN chemical plants
- Daily Maverick: Former Prasa chairperson‘s company got R99m in ill-fated locomotive deal, inquiry told
- Daily Maverick: Green Scorpions close in as Karpowership fights to rescue R225bn deal
- Business Day.za: STEPHEN CRANSTON: Standard Bank partly to blame for Liberty’s fall from grace
- Business Day.za: Afrox to prioritise medical oxygen despite force majeure
- Karooooo Ltd. (KARO US) 1Q
- Annual General Meetings: VOD SJ
- Other Events: MDC LN
European stocks closed lower on Friday as investors monitored economic data, corporate earnings and the spread of the delta Covid-19 variant. The pan-European Stoxx 600 ended the session down 0.3%, with miners tumbling 2.8% to lead losses as the majority of sectors and major bourses finished in the red. The benchmark was down about 0.7% on the week, having hit a record high on Monday. euro zone inflation slowed in June, official data confirmed on Friday, with consumer prices rising 1.9% annually after a 2% climb in May, marking the first slowdown since September 2020. A surge in Covid-19 cases across the continent caused by the highly-transmissible delta variant continues to weigh on investor sentiment, with several major European countries forced to reimplement social restrictions, while the U.K. will take the gamble of removing its last layer of safeguards from Monday. The U.K. reported 51,870 new coronavirus cases Friday, marking the first time since mid-January that daily infections have risen above 50,000. Earnings season is also beginning in earnest in Europe, with Richemont, Rio Tinto and Ericsson the big names reporting on Friday, while Burberry issued a promising first-quarter trading update. Ericsson shares plunged 9.4% to the bottom of the Stoxx 600 Friday as a decline in sales in mainland China led the Swedish telecoms giant to deliver core earnings slightly below market estimates. At the top of the benchmark, SoftBank-backed Swedish cloud computing firm Sinch surged 14.6% after a robust earnings report.
U.S. stocks fell on Friday, pushing the Dow Jones Industrials Average into the red for the week, as inflation fears overshadowed strong retail sales numbers and better-than-expected earnings reports. The Dow lost 299 points, or 0.86%, to close at 34,687.85. The S&P 500 dipped 0.75% to 4,327.16 and the Nasdaq Composite shed 0.8% to 14,427.24. The three averages closed the week lower to each snap 3-week win streaks. The Dow ended the week down 0.52%, while the S&P 500 dipped 0.97% and the Nasdaq Composite fell 1.87% during the same period. A U.S. consumer sentiment index from the University of Michigan came in at 80.8 for the first half of July, down from 85.5 last month and worse than estimates from economists, who projected an increase. The report released Friday showed inflation expectations rising, with consumers believing prices will increase 4.8% in the next year, the highest level since August 2008. The Dow gave up its gains early Friday shortly after the University of Michigan report came out 30 minutes into the session. Losses increased as the day went on with major averages closing at the lows of the session. Stocks got off to a good start Friday with the Dow rising more than 100 points to above 35,000 shortly after the open. Data released before the bell showed retail and food service sales rose 0.6% in June, while economists surveyed by Dow Jones had expected a 0.4% decline. If that level held, it would have been the Dow’s first close ever above 35,000. Despite the week’s losses, the Dow is still up 13% for the year and sits just 1.15% from an all-time high. The S&P 500 is up 15% on the year and is 1.51% below its record level. Investors digested strong earnings results from the first major week of second-quarter reports. Though some of the nation’s largest companies posted healthy earnings and revenues amid the economic recovery, the reaction in the stock market has so far been muted. Good earnings might have become an excuse for some investors to take profit. And with earnings expectations so high in general, it takes a really big beat for a company to impress
Shares in Asia-Pacific slipped in Monday trade, as oil prices fell after OPEC and its allies reached a deal. The Nikkei 225 in Japan dropped 1.46% in afternoon trade while the Topix index shed 1.39%. South Korea’s Kospi fell 0.91%. In Hong Kong, the Hang Seng index slipped 1.59% by the afternoon. Mainland Chinese stocks also declined, with the Shanghai composite down about 0.3% while the Shenzhen component dipped fractionally. Australian stocks also declined as the S&P/ASX 200 dropped 0.85%. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.19%. In the afternoon of Asia trading hours on Monday, international benchmark Brent crude futures slipped 1.06% to $72.81 per barrel. U.S. crude futures also declined 1.09% to $71.03 per barrel. Shares of oil firms in Asia-Pacific also declined in Monday trade, with Santos in Australia falling 2.56%. Japan’s Inpex dropped 2.1%, while Japan Petroleum Exploration plunged 2.56%. CNOOC shares in Hong Kong slipped 1.35%. OPEC and its allies reached a deal on Sunday to phase out 5.8 million barrels per day of oil production cuts by September 2022. Coordinated increases in oil supply from the group — collectively known as OPEC+ — will start in August, OPEC said in a statement. The development came as Brent surged more than 40% so far in 2021, with demand for crude rising as the global economy recovers from the pandemic.
Gold steadied with the U.S. dollar as Treasury yields dropped on concerns over elevated inflation and as the spread of the Covid-19 delta variant weighs on the outlook for the global economy. Bullion is stabilizing above $1,800 an ounce as investors weigh the outlook for stimulus, the global recovery and the rally in Treasuries, which sent 10-year yields further below 1.3%. Spot gold was little changed at $1,814.25 in Singapore. Silver fell, while palladium rose and platinum steadied.
Oil declined after OPEC+ agreed to boost production into 2022, resolving a bitter internal dispute that had shaken the alliance with a pledge to restore millions of barrels of crude output to the energy market. Global benchmark Brent and West Texas Intermediate each shed 0.9%. The Organization of Petroleum Exporting Countries and allies will add 400,000 barrels a day each month from August until all halted output is revived. The deal also gives Saudi Arabia, the UAE, Iraq, Kuwait and Russia higher baselines against which cuts are measured from May 2022. At the same time, a surge in virus cases from the U.S. to Asia threatens to set back the demand recovery.
Copper prices fell on Monday as the dollar hovered near its highest levels in months, making greenback-priced metals more expensive and less appealing to holders of other currencies. Three-month copper on the London Metal Exchange fell 0.5% to $9,380 a ton, while the most-traded August copper contract on the Shanghai Futures Exchange declined 0.6% to 68,770 yuan a ton. LME nickel rose 0.3% to $19,120 a ton, zinc declined 0.7% to $2,982 a ton and tin fell 0.3% to $33,490 a ton. ShFE tin climbed 3.3% to 232,920 yuan a ton, aluminum shed 0.8% to 19,345 yuan a ton and nickel jumped 1.7% to 143,280 yuan a ton. China’s aluminum imports in June rose 30% from the prior month, data released by the General Administration of Customs showed on Sunday.
Iron ore futures slid as China’s efforts to clean up the world’s biggest steel industry cast doubt on the strength of raw-material demand. Citigroup Inc. expects a downturn in iron ore prices after the third quarter amid uncertainties around steel demand and Chinese policies, analysts wrote in a note. Iron ore futures in Singapore fell 0.9% to $212.10 a ton, following a weekly advance. Prices in Dalian dropped 1.9%, while steel rebar futures and hot-rolled coil climbed in Shanghai.