Global Stock Markets Fall On Growth And Tapering Fears

09/09/2021 Asia-pacific markets dropped on Thursday, taking cue from Wall Street, as investors continued to worry about slowing global growth and the potential tapering of central bank stimulus. Today the ECB is in focus, with analysts expecting it to announce steps towards reducing its emergency economic support later. The dollar remained steady, treasuries held advances . U.S. and European futures declined. MSCI’s broadest index of Asia-Pacific shares ex. Japan slipped lost 1.04%. China’s technology stocks dropped after officials told private firms, including Tencent Holdings Ltd. and Netease Inc., to end their focus on profit in gaming. Japan’s Nikkei retreated as Tokyo plans to extend virus emergencies. Both the S&P500 and the Dow extended the drop from record highs, with the tech-heavy Nasdaq posting the biggest drop in two weeks.
OIL: prices rose for a second session on Thursday as U.S. production is struggling to recover from Hurricane Ida. The Gulf’s offshore wells make up about 17% of U.S. output. API data showed U.S. gasoline stocks fell by 6.4 million barrels for the week ended Sept. 3, while crude stocks dropped by 2.9 million barrels. Brent added 5 cents, or 0.8% to $72.73 a barrel this morning, while Texas’ WTI crude remained pretty flat 0.07% at $69.33 a barrel.

GOLD: the bullion was down on Thursday morning, remaining near two-week lows. A strengthening dollar index futures contributed to the yellow metal’s losses as investors turned to the dollar for a haven on concern over the outlook for global economic growth. Gold futures retreated 0.05% to $1,788.34 after hitting $1,781.30 lows

What to watch this week:
• U.S. President Joe Biden may make his choice this week on whether to renominate Fed Chair Jerome Powell to a second term
• ECB President Christine Lagarde holds a press conference after the bank’s rate decision Thursday
• China PPI, CPI, new yuan loans, money supply, aggregate financing, Thursday

Local Market
The JSE closed lower on Wednesday, taking cue from global counterparts. The local bourse slipped 1.50% to 65,525.35 at the close, alongside the blue-chip Top-40 giving up 1.60% on the day. Banks firmed up 0.30% at the close, with Capitec remaining flat after the FSCA fined Viceroy Research R50m for a report on Capitec it says was false, misleading and deceptive. The local currency pretty flat against the dollar at the moment, having strengthened 0.7% to R14.21/$ yesterday.Yield on 10-year govt rand bonds fell 2.20 bps to 9.18 %. With the Top-40 futures on the backfoot -520 points, on IG markets, and Tencent in Hong Kong down almost 6%, the local market is poised for a softer start at the opening bell.

Statistics South Africa announces July manufacturing-production data at 1pm. Output is forecast to have increased 3% y/y, although a decline is expected on the previous month.

• South Africa Plans Temasek-Style Firm to Mana ge State Companies
• Short Seller Viceroy Fined by South Africa Over Capitec Note
• Worst-Ever Death Claims Lay Bare Pandemic’s Toll on South Africa
• South African Stocks Benchmark Heads for Lowest Close Since July
• Anglo American’s De Beers Sells $515m Diamonds at Seventh Sale
• Business Government weighs vaccination passports and easing of level 3 lockdown
• 11am: 2Q Current Account Level, est. 334b, prior 267b
• 11am: 2Q Current Account as a % GDP, est. 6.7%, prior 5.0%
• 9am: Ex-President Jacob Zuma’s corruption trial resumes brefly to announce a postponement until Sept. 20
• 9:30am: Western Cape Premier holds weekly COVID digital press conference
• 1pm: Independent Electoral Commission holds a media briefing

European markets closed lower following losses overnight in Asia and the US and nerves ahead of the ECB meeting on Thursday which will see policymakers debate a cut in its pandemic-era stimulus program. Analysts expect the ECB to announce a cut to the pace of its emergency bond purchases from next quarter but will keep buying bonds at least until 2024 under its main programme, and possibly much longer. The Europe-focused Stoxx600 index fell 1.1%, with automobile stocks leading losses with a 2.2% drop. Financial services, oil & gas, and banking stocks fell around 1.3%. All major regional bourses were lower with the Dax off by 1.47%, FTSE100 down 0.75% to and the Cac-40 retreating 0.85%. B&M European Value Retail surged 6.92% after the discount retailer said it expects interim core earnings to be ahead of analysts’ forecasts on the back of stronger gross margins. Smiths Group rose 2.57% after agreeing to sell its medical business to US-based ICU Medical for $2.4bn, withdrawing its support for a rival $2bn offer from TA Associates agreed last month.

Trading on Wall Street got off to a poor start after Fed. Reserve Bank of St. Louis, James Bullard, dismissed concerns about a slowdown in hiring and said the Fed would start tapering those bond purchases before the end of 2021. Against that backdrop, the S&P 500 closed in the red for a third consecutive day. The benchmark slipped 0.13% at the close, alongside the Dow giving up 69 points, or 0.20%, while the Nasdaq was down 0.57%. The dollar was supported on Thursday, while the euro steadied ahead of a European Central Bank meeting. U.S. stocks futures on the backfoot across the board 0.45%. Market looking forward to “Initial Jobless Claims” this afternoon.

Japan is to further extend a state of emergency in Tokyo and nearly 20 other areas until the end of September as the health care systems remain under severe strain though coronavirus infections have slowed slightly – 60% of the population is expected to be vaccinated by end of September 2021. The Nikkei has slipped 0.67% below the 30,000 mark. Hong Kong stocks drifted lower as tech shares tumbled on China’s tightening oversight on gaming companies, while China Evergrande Group plunged on concerns of its financial woes. Hong Kong’s Hang Seng index dropped 20.8%, while China’s blue-chip CSI slid 0.72%. Aussie’s ASX200 ;on the backfoot 1.93%, the gauge weighed down by both the financial and I.T sector down 2.40 and 3.0% respectively.