Stocks Steady as Traders Mull Taper and China Risks

17/09/2021 Asian Stocks and U.S. futures are mixed this morning as risks to the global recovery from China and the prospect of reduced Federal Reserve stimulus subdued sentiment. Iron ore was on track for a record weekly slump and has now halved since it’s May highs. Treasury yields and the dollar stayed higher following the surprise strength in U.S. retail sales, which eased economic worries sparked by the delta strain and highlighted the case for less expansive Fed support. Jobless claims increased, likely reflecting volatility in weekly data as the labour market broadly recovers.

Locally the JSE All Share slumped to a seven-month low as falling metal prices drove down precious-metal producers and iron ore miners, a weaker rand weighed on banks and insurers. The JSE had a tough afternoon, precious metals were hit hard, Bullion slumped 2.3% in afternoon trade and silver fell to the lowest in more than nine months this after the US retail sales rose unexpectedly in August. The JSE precious metal index fell 4.69% with NPH, AMS and GFI all losing 5.16, 5.76 and 6.29 percent respectively. The All Share closed down 1.66 percent with no local indexes in the green. September futures close out pushed volumes to R 60.8 billion and we should see another big volume day with Index re-balancing in the closing auction today. We could see the local market open higher as US Futures trade up, Tencent is 2.71 % higher and there’s a small bounce in Gold and Platinum. IG Top 40 Index is up 451 points.

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European stocks finished higher yesterday, as global investors kept an eye on economic data and central banks. The pan-European Stoxx 600 index rose 0.5% by the close, with travel and leisure stocks adding 3% to lead the gains. Basic resources bucked the trend, slipping 2.5%. FTSE + 0.16%,CAC + 0.59%, DAX + 0.28%.
In the US overnight, the Dow lost 63 points, after being down as much as 274 points at its low. The S&P 500 fell 0.16% and the Nasdaq was the outperformer, rising 0.13% as Netflix, Microsoft and Amazon all closed in the green. August’s retail sales increased 0.7% for the month against the Dow Jones estimate of a decline of 0.8%. However, the retail sales beat came after the initial estimate for July was revised down sharply from a month-over-month gain of 0.5% to a decline of 1.8%. Weekly jobless claims increased to 332,000 for the week ended Sept. 11,the estimate was for 320,000. Stocks are heading into the week-end with modest gains for the week. The Dow is up 0.41% and the S&P 500 is up 0.34% and the Nasdaq has gained 0.44% this week. Meanwhile, for the month, stocks are in the red. The Dow is down 1.7% in September. The S&P 500 is off by 1.1% this month but still just 1.6% from its all-time high and the Nasdaq has lost 0.5% this month.
Shares in Asia-Pacific are mixed, with shares of China Evergrande Group continuing to take a beating. By Friday afternoon in Hong Kong, China Evergrande Group shares plummeted 12 % as fears over its debt problems continue to weigh on investor sentiment. The Hang Seng is however up 0.58% with Tencent up 2.71%. The Australian ASX 200 fell 0.79% weighed down by the AUS Mining Index which is down 4.59%. The Australian miners dropped following a recent decline in iron ore and precious metal prices: Rio Tinto declined 4% and BHP shed 3.95% while Fortescue Metals Group plunged 11.7%. on a brighter note the Nikkei is up 0.54% and the MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.23%.
Oil prices are just slightly lower even though more supply came back online in the U.S. Gulf of Mexico following two hurricanes, with benchmark contracts on track to post weekly gains of around 4% as the output recovery is seen lagging demand. Brent is near a seven-week high and WTI near a six-week high, Brent $ 75.51, WTI $ 72.43.
Gold prices are set for a second weekly loss as a firmer dollar dented the metal’s allure for holders of other currencies while investors await a key U.S. Federal Reserve meeting for clues on how soon the central bank will start to taper stimulus. Bullion slumped 2.3% yesterday and silver fell to the lowest in more than nine months after American retail sales rose unexpectedly in August. Bullion received another blow this week after BlackRock Inc. fund manager Russ Koesterich said he sold almost all of his gold holdings on expectations that real rates will normalize as the global economy rebounds. Gold + 0.5% $ 1762, Plat + 0.89% $ 945 and Palladium – 1.33 % $ 2007.