20/07/2021 A retreat in global stocks extended into Tuesday as the threat posed to the economic recovery from the spread of the delta coronavirus variant supported havens such as Treasuries. Equities fell in Hong Kong, Japan and China, with cyclicals like energy and industrial stocks among the weakest performers in the Asian retreat. Apple Inc.’s move to push back its return-to-office plans due to virus flareups tempered an advance in S&P 500 contracts. The S&P 500 fell the most in two months overnight as the reopening trade reversed. European futures wavered. Long-term Treasury rates were steady after spiraling Monday to their lowest since February, flattening the yield curve. Ten- year yields hovered below 1.2%. The dollar paused a three-day climb and the yen held gains. Brent oil was steady after tumbling to an eight-week low amid a broader market rout on concerns about the impact of the Covid-19 resurgence on energy demand. Tencent trades 1.6% lower in HK. The Rand is weaker at 14.57 vs the USD, with the FTSE JSE Top 40 futures indicating a slightly better start up 240 points or 0.42%, after yesterday’s massive falls.
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 2.6% to 64,804, with resources weighing the most on lower commodity prices. The precious metals & mining index closed the session down 4.1%, with the RESI down 3.6%. All sectors were in the red, with banks losing 2.4%, retailers shed 1.04% and property gave up 1.03%. The Rand was down 0.6% to 14.51 per US$, with the Yield on 10-year govt rand bonds that rose 3.30 bps to 9.36%.
Deputy Chief Justice Dikgang Moseneke presents a report on his inquiry into whether the country can ensure free and fair local government elections during the Covid-19 pandemic and makes recommendations to the Independent Electoral Commission on whether municipal polls should go ahead this year.
- Riots Spur South Africa to Consider Paying Stipends to Poor
- Markets Are Getting It Wrong on South Africa’s Rate Path
- Rand Weakens Amid Global Risk-Off Turn: Inside South Africa
- African Central Banks to Hold Rates Amid Virus Resurgence
- S. Africa’s Precious Metal Miners Fall as Gold, Platinum Drop
- S. African Stocks Head for 3-Month Low as Global Equities Slump
- Vukile Property Fund Cut to Neutral at Nedbank CIB
- MEDIA SUMMARIES:
- Fin24: Steinhoff set to appeal judgment that it breached the Companies Act in 2019t
- Business Day.za: SA cities hit by Moody‘s ratings downgrades
- Toyota Uncertain About S.Africa Business After Riots, Beeld Says
- 9am: May Leading Indicator, prior 125.8
- 10am: Former President Jacob Zuma appears in court on corruption charges, trial resumes
- 11am: South Africa to Sell 1.3B Rand of 8.875% 2035 Bonds
- 11am: South Africa to Sell 1.3 Billion Rand of 8% 2030 Bonds
- 11am: South Africa to Sell 1.3 Billion Rand of 8.25% 2032 Bonds
- Earnings Calls: KARO US
- Sales Results: AAL LN, AMS SJ, BHP LN, KIO SJ
European stocks plunged on Monday as investors reacted skittishly to rising cases of Covid-19 around the world, fueled by the highly-transmissible delta variant. The pan European Stoxx 600 closed down 2.3%, with banks, energy and travel shares leading the losses. Carnival was the worst performer in the travel sector, sliding 8.3%. A surge in Covid-19 cases across the continent caused by the highly transmissible delta variant continues to weigh, with several major European countries forced to reimplement social restrictions, while the U.K. lifted most remaining restrictions on Monday despite reporting a high number of daily cases. The devastation caused by massive flooding around Germany and Belgium could weigh on sentiment in the region this week, as well as ongoing coronavirus concerns. In terms of individual share price movement, Swedish industrial valve manufacturer Indutrade climbed 4.8% to the top of the Stoxx 600 following a strong second-quarter earnings report. U.K. retail technology company Ocado slipped 1.9% after a fire caused by a robot collision at one of its warehouses resulted in the cancellation of thousands of orders. Meanwhile, in corporate news, Chinese tech giant Tencent announced a deal to buy British video game developer Sumo Group for $1.26 billion, sending the latter’s shares up more than 40%.
U.S. stocks fell aggressively Monday on concern a rebound in Covid cases would slow global economic growth. The selling picked up as the session went on, and the Dow Jones Industrial Average had its worst day since last October. The Dow dropped 725 points, or 2.1%, to 33,962 in a broad-based rout that sent all 30 members lower. At one point during the session, the Dow was down 946 points before recovering some ground into the close. The S&P 500 fell 1.6% to 4,258. Energy, financials and industrials were the worst-performing sectors. The tech-dominated Nasdaq Composite slid 1.1% to 14,274, posting its fifth-straight day of losses and worst losing streak since October. The 10-year Treasury yield reached a five-month low of 1.17%, exacerbating fears about the slowing economy. The small-cap Russell 2000 dropped 1.5% and briefly dipped into correction territory on an intraday basis – down more than 10% from its March high. Covid cases have rebounded in the U.S. this month, with the delta variant spreading among the unvaccinated. The U.S. is averaging nearly 26,000 new cases a day in the last seven days through Sunday, up from a seven-day average of around 11,000 cases a day a month ago, according to CDC data. Cases were already flaring up around the world because of the delta variant. The Cboe Volatility Index surged as high as 25 amid the broad market sell-off, its highest level since May. The so-called fear gauge looks at prices of options on the S&P 500 to track the level of fear on Wall Street. Airlines got hit as investors reassessed whether travel among consumers would live up to high expectations, with shares of Delta and American sinking about 4% each. United lost 5%. Key stocks linked to global economic growth also fell. Boeing shed 5%, and General Motors and Caterpillar dropped about 2% each. The Financial Select Sector SPDR was the second-worst performer, down 2.8% as falling yields crimped the profitability outlook for banks. JPMorgan dropped 3.2%, and Bank of America fell 2.6%. Market breadth was extremely poor with advancers beating decliners on the NYSE by nearly 5-1. Big Tech shares were not immune to the sell-off, with Apple and Alphabet each down about 2%.
Shares in Asia-Pacific fell in Tuesday trade following an overnight tumble for stocks on Wall Street that saw the Dow Jones Industrial Average plunge more than 700 points. In Japan, the Nikkei 225 slipped 0.99% while the Topix index fell 1.01%. South Korea’s Kospi declined 0.8%. Mainland Chinese stocks were lower by the afternoon, with the Shanghai composite 0.5% lower while the Shenzhen component shed 0.41%. Hong Kong’s Hang Seng index fell 1.19%. The S&P/ASX 200 in Australia dropped 0.71%. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.97%. China kept unchanged its benchmark lending rate for corporate and household loans — the one-year Loan Prime Rate (LPR) held steady at 3.85% while the five-year LPR was also left at 4.65%. Majority of traders and analysts in a snap poll expected no change to both the one-year or five-year LPR, according to Reuters. Markets in Indonesia, Malaysia and Singapore are closed on Tuesday for holidays. The Japanese yen traded at 109.43 per dollar, stronger than levels above 110.5 seen against the greenback last week. The Australian dollar changed hands at $0.7321, off levels around $0.738 seen yesterday.
Gold rose as the spread of the delta coronavirus variant threatens the world’s exit from the pandemic, boosting haven demand. Bullion has rebounded in the past month to trade above $1,800 an ounce after a volatile year tied to shifting expectations for economic prospects and the pace of monetary tightening. Spot gold rose 0.3% to $1,818.25 an ounce in Shanghai. Platinum gained 1%, while palladium and silver steadied.
Brent oil was steady after tumbling to an eight-week low amid a broader market rout stoked by a Covid-19 resurgence, which has raised concerns about the short-term outlook for energy demand. Futures in London traded near $69 a barrel after plunging 6.8% on Monday, the most since March.
Copper bears have their hands firmly on the tiller as futures in Shanghai fell a second day against an unfavorable macro backdrop including a plunge in oil prices. Coal futures rose to within touching distance of the all-time- highs set in May.
Iron ore’s volatile year faces a fresh test as the world’s biggest miners signaled a complex supply outlook just as concerns mount that Chinese demand may falter. Brazil’s Vale SA produced slightly less iron ore than expected last quarter, though volumes were up from the prior period and it maintained its full-year guidance. BHP Group said Tuesday it could further boost output in fiscal 2022 after a record year, while Rio Tinto has warned of a struggle to meet demand and flagged its full-year shipments could be at the lower end of its forecast. Futures in Singapore were steady at $213.60 a ton after climbing to a record in May, collapsing into a bear market and then returning to a bull market in the space of about a month. Prices in Dalian rose 1%, while steel rebar futures and hot- rolled coil advanced in Shanghai.