Asia-pacific Markets Steady As Traders Await Powell; Dollar Climbs

27/08/2021 Equities markets in Asia mixed on Friday morning as in China and Hong were balanced by declines elsewhere and investors globally turned cautious ahead of a long-awaited speech by Fed Chair Jerome Powell – Jackson Hole symposium. Traders will analyse Powell’s words for any hints about when the Fed will begin tapering its asset purchasing programme. Scepticism remains that the Fed will provide more specific information amidst a rise in Delta variant COVID cases worldwide. President Joe Biden’s advisers are considering recommending Fed Chair Jerome Powell for a second term, a step that could bolster expectations of continuity in accommodative monetary policy. ISIS struck the crowded gates of Kabul airport in a suicide bomb attack on Thursday, killing scores of civilians and at least 13 U.S. troops. This, along with public remarks by some Fed. Reserve officials saying the time for tapering is near contributed to Wall Street closing slightly lower. The MSCI’s broadest index of Asia-Pacific ex. Japan nudged up 0.10% while Australia remained flat and Japan’s Nikkei underperformed. Tencent 0.70% firm as Chinese technology equities push higher in a week of big swings stoked by Beijing’s regulatory crackdown on private industries.

Oil prices rose on Friday on worries about near term supply disruptions as energy companies began shutting production in the Gulf of Mexico ahead of a potential hurricane forecast to hit on the weekend. U.S.WTI crude futures climbed 57 cents, or 0.85%, to $67.99 a barrel this morning; while Brent crude futures similarly rose 65 cents, or 0.91%, to $71.72 a barrel. Brent is on track for a rise of more than 9% this week.

Gold was up on Friday as traders await Powell’s speech at the Jackson Hole symposium. Gold Futures were up 0.32% to $1,798.04. Some Fed officials urged the central bank to begin asset tapering, with the measures currently in place ineffective and even potentially harmful. Copper slipped 0.6% to settle at $9,299.50 a ton on the London Metal Exchange.
On Thursday the JSE tracked weaker global counterparts ahead of Powell’s speech. The symposium of finance ministers, central bankers, analysts and investors, held virtually this year, is expected to yield many opinions on where the global economy is heading while still in the grips of the Covid-19 pandemic. The All-share gave up 0.57% to 67,068 points and the blue-chip Top-40 eased 0.58%. Industrial metals lost 1.41%, food producers 1.21%, resources 0.86% and industrials 0.68%. Precious metals gained 0.48% and banks 0.21%. Multichoice Group recouped previous day’s losses to gain 7.10%, to close at R113.24. The rand reached an intraday best of R14.8695/$.

The National Treasury will offer R1.3 billion of inflation-linked bonds due 2025, 2038 and 2050 at its weekly auction on Friday. Closing time for bids is 11am. Rand up 0.16% to R14.9110/$. Yield on 10-year govt rand bonds fell 1.60 bps to 9.21 %. Top-40 futures pretty flat, steady -60 points.

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• June Platinum Production YoY, prior 27.0%
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European markets dipped on Thursday after data showed German consumer survey showed sentiment weakening, while investors fretted over U.S. monetary policy ahead of the Jackson Hole symposium. The pan-regional Stoxx 600 index was down 0.3%, with all major bourses on the continent lower. Germany’s DAX was down 0.42%, UK’s FTSE 100 and France’s CAC 40 declined by 0.4% and 0.2%, respectively. In equity news, DWS Group (Deutsche Bank asset management wing) fell 13.7% on a report U.S. authorities were investigating DWS over sustainability claims. Deutsche Bank’s shares dropped 1.5%.France’s Vivendi rose 2.6% after its unit Universal Music Group said it expects further revenue growth this year and it aims to pay out dividends once it lists in Amsterdam.

The S&P 500 dived 0.58% after the two explosions outside Kabul’s international airport resulted in several casualties and Fed officials urged policy makers to slow asset purchases. Both the Dow and Nasdaq slipped 0.54% land 0.64% respectively. US initial jobless claims pushed up by 4,000 to 353,000 from the previous week’s level, which was revised up by 1,000 – analysts had expected a level of 350,000. Fed. Dallas President, Robert Kaplan, said he favours starting asset tapering in October 2021 or shortly after, with interest rate hikes following in 2022. St. Louis Fed President James Bullard called for a start in fall 2021, while Kansas City Fed President Esther George urged for an early move to begin in 2021.

Here are some events to watch this week:
• Fed officials participate in the Jackson Hole Economic Policy Symposium on Friday
• July U.S. personal income and spending data Friday. Investors will scrutinize the personal consumption expenditures price index, an inflation measure closely watched by the Fed.

Japan’s Nikkei slid 0.50% on Friday; with SoftBank Group falling 0.6%, Sony Group Corp. declining 0.58% and Toyota Motor Corp. dropping 0.55%. Aussie’s ASX200 flat 0.05%, with gains in financials 0.20% and Industrials 090% offset elsewhere. The Shanghai Composite advanced 0.49%, while Hong Kong gained 0.51%. If Powell’s speech turns out to be a non-event, the follow-up market risk event will be the jobs report next week, which will provide more concrete data in steering the timeline of tapering ahead