27/09/2021 Asian stocks fluctuated this morning as investors weighed the implications of surging energy prices and risks from China. MSCI’s index of Asian shares pared gains. Hong Kong came off its highs, while gains were also trimmed in Japan and Australia. Shares in Shanghai declined as materials stocks dropped on worries that power curbs are hurting manufacturing. U.S. futures climbed. Bitcoin traded around $44,000 after digital currencies plunged Friday as China intensified its push to rein in crypto speculation and mining, but recovered much of the drop over the weekend. The S&P 500 edged up on Friday to eke out the first weekly gain in three.
Locally we should be in for a positive start after Fridays Heritage day holiday. US Futures are firmer, Tencent is off its highs but is still up 0.82 percent and IG Top 40 is up 404 points. Looking back to last week, the JSE Allshare recovered well after losing 2.24% on Monday, it gained 1.10% on Thursday to end the week up 1.89%. The Rand did firm to R 14.58/$ on Thursday after the SARB’s decision to leave its benchmark rate unchanged, however it lost all the gains and more to touch R 15/$ on Friday, the ZAR is R14.91/$ at the moment.
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Here are some events to watch this week:
• Fed Chairman Jerome Powell, Treasury Secretary Yellen to testify at a Senate Banking Committee hearing Tuesday
• European Central Bank President Christine Lagarde speaks Tuesday
• Japan’s ruling party votes to elect leader, Wednesday
• Central bank chiefs Andrew Bailey (BOE), Haruhiko Kuroda (BOJ), Christine Lagarde (ECB) and Jerome Powell (Fed) participate in an ECB Forum panel, Wednesday
• House Financial Services Committee hearing on the Fed, Treasury’s pandemic response, Thursday
• China Caixin manufacturing PMI, non-manufacturing PMI, Thursday
• U.S. manufacturing PMI, Friday
European stocks are set to rise on Monday, with German election results seen eliminating a key market risk for investors in the region. In Germany, preliminary results on Monday morning showed the center-left Social Democratic Party gaining the largest share of the vote with 25.8%. Angela Merkel’s right-leaning bloc of the Christian Democratic Union and Christian Social Union was seen with 24.1% of the vote. But coalition negotiations, which could begin on Monday, are likely to take weeks or even months. Market watchers noted that the poor showing for Germany’s far-left Die Linke party, meant that a fully left-leaning coalition in the Bundestag was now out of the question. The German DAX is set to rally by 107 points to 15,527, while the U.K.’s FTSE 100 is set to climb by 59 points to 709, and France’s CAC 40 is set to rise by 43 points to 6,675, according to IG.
In the U.S, Wall Street is coming off a roller-coaster week amid a slew of concerns from the debt crisis of China’s real estate giant Evergrande, to the Federal Reserve’s signal on rollback in monetary stimulus, and to Beijing’s crackdown on cryptocurrencies. Still, major averages managed to wipe out steep losses earlier in the week and eke out small gains. The Dow finished the week 0.6% higher, breaking a three-week losing streak. The S&P 500 rose 0.5% on the week, while the tech-heavy Nasdaq Composite edged up 0.02% last week. Eyes will also be on US fiscal policy with the House of Representatives due to vote on a $1-trillion infrastructure bill this week, while a September 30 deadline on funding federal agencies could force the second partial government shutdown in three years. The week is packed with US Federal Reserve speeches led by chair Jerome Powell on Tuesday and Wednesday, with more than a dozen other events on the calendar.
So far, September is living up to its reputation for volatility and weakness as major averages have all registered modest losses. The S&P 500 is off by 1.5%, on track to post its first negative month since January. The broad equity benchmark is about 2% off its record high from Sept. 2. The Dow is down 1.6% for the month, while the Nasdaq is down 1.4%.
Oil prices rose for a fifth straight day with Brent heading for $80 amid supply concerns as parts of the world sees demand pick up with the easing of pandemic conditions. Oil stormed past its July peaks as global output disruptions forced energy companies to pull large amounts of crude out of inventories, while a shortage of natural gas in Europe pushed costs up across the continent. Brent + 1.31% $ 79.11, WTI + 1.38% $ 75.03.
Gold prices edge higher as persistent concerns over the fate of debt-laden property giant China Evergrande and its broader impact bolstered the precious metal’s safe-haven appeal. Gold + 0.33% 1756, Platinum + 1.44% $ 1000 and Palladium + 0.62% $ 1985.
Iron Ore surged past $120 a ton, accelerating its rebound from the lowest in more than a year as some steel mills looked to build up inventories ahead of an extended holiday in China. Futures in Singapore jumped more than 9% on Monday on expectations of stockpiling and as demand improves following the summer lull. Profits at Chinese mills have returned to around the highest since May, according to a Bloomberg Intelligence gauge.