Asia Stocks Fluctuate Ahead of U.S. Inflation Data / S&P 500 & Dow hit records after Senate passes $1 trillion infrastructure bill

11/08/2021 Asian stocks were mixed Wednesday as investors awaited a key report on U.S. inflation. Treasuries and the dollar were steady. Shares rose in Japan and saw modest gains in Australia and Hong Kong. China was little changed, while stocks in South Korea retreated after the country posted a record number of coronavirus cases. U.S. futures fluctuated. Earlier, the S&P 500 climbed to an all-time high, while the tech-heavy Nasdaq 100 declined. Crude oil was steady after bouncing from a three-week low as a report showed shrinking inventories. Meanwhile, the Senate passed a $550 billion infrastructure plan, sending the legislation to the House for a vote, though investors believe it will take years for the impact of the spending to be felt. Tencent trades 1.1% lower in HK. The Rand remains weak at 14.84 vs the USD, with the FTSE JSE Top 40 futures indicating a slightly negative start down 66 points or 0.11%.
Here are some key events to watch out for this week:

  • Kansas City Fed President Esther George among Fed speakers through the week
  • The U.S. consumer price index on Wednesday is forecast to show prices increased again in July
  • OPEC Monthly Oil Market Report due Thursday
    Yesterday the FTSE/JSE Africa All-Share Index closed up 1.4% to 69,602, mostly driven by solid gains in Naspers and Prosus with both up over 10% as they caught up with a rally in Tencent. Rand hedgers like Mondi, BHP.BTI and Investec all closed higher on the back of a weaker Rand, with losses seen from gold and platinum miners. Anglogold lost the most giving up 8% with Northam Plats shedding 3.7% on the day. The Rand was 0.3% weaker at 14.84 per US$, with the Yield on 10-year govt rand bonds that rose 0.30 bps to 9.33%.
    President Cyril Ramaphosa resumes testimony at long-running inquiry into corruption during the administration of predecessor Jacob Zuma; Ramaphosa served as deputy from 2014 until 2018.
  • South African ruling party official Ace Magashule to appear in court on corruption, fraud and money-laundering charges.
  • South Africa Outlines Timeline to Cut Energy Reliance on Coal
  • Bank Zero Enters South African Market Seeking Pandemic Rebound
  • Explosion at Utility May Push South Africa Blackouts to Record
  • MEDIA SUMMARIES:
  • News24: SANDF medical boss: Zuma’s life is at ‘significant risk’, will take six months to treat him
  • Daily Maverick: Dark cloud over R100m pension fund deal lingers over new Finance Minister Enoch Godongwana’s head

EARNINGS:

  • Nedbank (NED SJ), 1H

ECONOMIC DATA:

  • 11:30am: July SACCI Business Confidence

GOVERNMENT:

  • Deputy President David Mabuza to make first public address since returning from medical leave
  • Public hearings on Copyright Amendment Bill
    EU/UK
    European stocks closed higher on Tuesday, as traders shrugged off fears over the delta variant of Covid and rising inflation. The pan-European Stoxx 600 provisionally ended up by 0.4%, with travel and leisure stocks adding 2% to lead gains as almost all sectors and major bourses entered positive territory. Germany’s ZEW survey of economic sentiment for August missed expectations by a significant margin on Tuesday, tumbling to 40.4 from 63.3 in July. Economists polled by Reuters had expected a reading of 56.7. European companies reporting earnings on Tuesday included Hellofresh, Munich Re, ABRDN and InterContinental Hotels Group. Hellofresh rallied 9% to lead the Stoxx 600 after a strong second-quarter earnings report. Meanwhile, Deliveroo shares surged 6.9%, continuing to climb after announcing on Monday that Delivery Hero had taken a stake in the company. At the bottom of the European blue-chip index, German used car broker Auto1 Group fell 3.1% despite reporting the strongest quarter in its history after the bell on Monday. Shares of M&G sank 2.9% after the company swung to a loss after tax in the six months to June 30.
    US
    Stocks rose on Tuesday, pushing the Dow and S&P 500 to new records, after the Senate’s passage of a $1 trillion infrastructure package boosted stocks tied to economic growth. The Dow Jones Industrial Average rose 162 points to 35,264 to close at a record, led by Caterpillar, which gained nearly 2.5%. The S&P 500 rose 0.1% to 4,436 and closed at a fresh all-time high. Meanwhile, the Nasdaq Composite dipped about 0.5% to 14,788, as a rise in Treasury yields weighed on tech stocks. The Senate’s infrastructure plan, which includes $550 billion in new spending on transportation and broadband, is expected to help give the economy a boost as peak growth slows following the reopening from the pandemic. Stocks that potentially benefit from the Senate bill moved higher, with steelmaker Nucor jumping nearly 9.6%. Broader infrastructure exchange traded funds, including the iShares U.S. Infrastructure ETF and the Global X U.S. Infrastructure Development ETF, also outperformed the broader market. Bank stocks rose amid the jump in bond yields. Wells Fargo jumped 2%, while Goldman Sachs and Bank of America rose 2% and 1.8%, respectively. Investors dumped technology shares as rates bounced, and the so-called FAANG names all closed in the red. Energy stocks rebounded on Tuesday, after leading the market’s declines on Monday spurred by a drop in oil prices. Exxon Mobil and Chevron popped 1.7% and 1.8%, respectively. U.S. oil prices rose more than 2.5%. Stocks tied to the economic reopening also made back some of their losses from Monday. Norwegian Cruise Line gained 4.7% and American Airlines rose 1.8%. AMC’s stock jumped on Tuesday morning before reversing course later the day. The company reported a lower loss than expected for the second quarter. The movie theater operator also announced it would begin accepting bitcoin at all U.S. locations this year. nvestors await the consumer price index and producer price index data, both of which measure inflation and are scheduled to come out Wednesday and Thursday, respectively.
    ASIA
    Mainland Chinese stocks edged higher in early trade on Wednesday, as shares of its most indebted property developer Evergrande and some of its units soared. Meanwhile, oil stocks in the region jumped on the back of higher oil prices. The Shanghai composite rose 0.27%, while the Shenzhen component was up 0.15%. Hong Kong’s Hang Seng index rose 0.21%. Shares of China’s most indebted developer, Evergrande, jumped more than 8%, after the company said in a filing that it was in discussions to sell stakes in its units which include Evergrande Property Services and Evergrande New Energy Vehicle Group. Shares of Evergrande Property Services surged more than 16%, while the new energy vehicle unit jumped more than 8%. Japan’s Nikkei 225 climbed 0.51%, while the Topix jumped 0.9%. South Korea’s Kospi dipped 0.65%. The S&P/ASX 200 in Australia was up 0.32%. After spiking more than 2% on Tuesday, oil prices initially rose before edging lower Wednesday afternoon. Brent crude futures fell 0.28% to $70.43 per barrel. U.S. crude futures also slipped 0.37% to trade at $68.04 per barrel. Oil stocks in the region rose. In Australia, Santos was up 0.87%, while Beach Energy jumped 2.54%. Oil Search climbed 1.29%, and Origin Energy soared 3.54%. In Hong Kong, Petrochina jumped 3.41%, CNOOC climbed 1.61% and Sinopec was 1.68% higher.
    COMMODITIES
    Gold traded just above its lowest close in four months as the dollar paused its recent rally ahead of key U.S. inflation figures due Wednesday. Spot gold rose 0.3% to $1,733.92 an ounce by 11:21 a.m. Shanghai time. Silver and palladium were little changed, while platinum rose.
    Oil was steady after jumping the most in almost three weeks as an industry report pointed to shrinking U.S. gasoline and crude inventories. Futures in New York traded near $68 a barrel after closing 2.7% higher on Tuesday. The American Petroleum Institute reported motor fuel stockpiles fell by 1.11 million barrels last week, according to people familiar with the data.
    Iron ore futures in China declined as the country’s push to curb production hurt demand. Iron ore demand likely peaked in the first half of this year, in line with the construction sector’s seasonal activity in May and June, Fitch Solutions said in a report. China is pushing its steel mills to reduce output after production smashed records in the first half of the year. The latest move in the country’s efforts to rein in pollution has seen curbs in Tangshan that were initially slated to end this year extended until March to ensure good air quality for the Winter Olympics. Iron ore futures on the Dalian Commodity Exchange traded 0.8% lower at 846 yuan ($130) a ton.