01/10/2021 Asian stocks and U.S. futures started October on the back foot, after overnight losses in the S&P 500 capped its biggest monthly selloff since March 2020. Shares slumped in Japan and Australia, and a gauge of Asian stocks hit its lowest in more than a month. China began a week-long holiday and Hang Seng is closed today. U.S. benchmarks fell overnight even after confirmation that the House passed a nine-week spending bill to avert a U.S. government shutdown. The S&P 500 closed at the lowest level since July, extending its September losses to almost 5%. Economically sensitive companies like industrials and financials were among the worst performers.
The JSE followed global markets lower yesterday as investors paused to assess the extent of inflation. The All Share ended the last day of the quarter down 0.17 percent, ending the third quarter down 3.41 percent. US Federal Reserve chair Jerome Powell and his counterparts at the European Central Bank, the Bank of Japan and the Bank of England voiced cautious optimism yesterday that accelerating inflation brought on by supply-chain disruptions would prove to be temporary. Volume on the JSE was R 33 bln well up on the daily average in what has been a really good volume week. The JSE had its worse monthly decline since October 2020, with the all share having declined just less than 4% in September, with the damage coming mostly from commodity shares. The resource 10 index was down 13.5, however, the big industrial shares have held up reasonably well on the month, as have banks and financials. Shares of MTN and Aspen, are hovering at multiyear highs, indicating the disparate performance on the local market. We definitely in for a lower open as US Futures trade lower, Asian markets are lower and IG Top 40 is down 515 points.
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European stocks closed slightly higher yesterday but still wrapped up the month in negative territory. The pan-European Stoxx 600 closed up 0.2%, paring some of its earlier gains. The index is down 3.2% since the start of the month, ending a seven-month winning streak. Germany’s DAX fell 3.6% for the month, marking its first negative month since January 2021 and its worst month since October last year. The DAX also posted its first negative quarter since the first quarter of 2020. Data out of the UK yesterday showed that the economy grew by 5.5% in the second quarter, outstripping a previous estimate of 4.8% GDP growth. In France the French consumer spending rose by 1% in August from the previous month, after falling 2.4% in July. A Reuters poll had forecast a rise a 0.1%. the FTSE and CA closed down 0.31 and 0.62 percent respectively.
In the U.S the Dow fell 546 points, the S&P was 52 points lower and the Nasdaq down 66 points or 0.44%. The market just capped a tumultuous September as inflation fears, slowing growth and rising rates crept up. The S&P 500 finished the month down 4.8%, breaking a seven-month winning streak. The Dow and the Nasdaq fell 4.3% and 5.3%, respectively, suffering their worst months of the year. Ten of the 11 S&P 500 sectors suffered losses in September, led to the downside by a 7.4% monthly drop in materials stocks. Energy is the best performer of the month, gaining more than 9%. The S&P is now 5.2% below its all-time high reached in early September. The broad equity benchmark is still up nearly 15% on the year.
Shares in Asia-Pacific are lower across the region with Japanese markets leading losses. In afternoon trade, the Nikkei 225 fell 2.56% while the Topix index shed 2.31%. Sentiment at Japan’s large manufacturers improved in the three months to September, according to the Bank of Japan’s quarterly tankan business sentiment survey released Friday. Tthe headline index for large manufacturers’ sentiment came in at plus 18 , an improvement over the previous quarter’s reading of of plus 14. Australian stocks also notched heavy losses, with the S&P/ASX 200 falling 2.2%. Markets in Hong Kong are closed for a holiday, while those in mainland China are closed for the Golden Week holiday from Friday till October 7. MSCI’s broadest index of Asia-Pacific shares outside Japan traded 0.92% lower.
Oil prices are lower on the prospect that the OPEC+ supplier alliance might step up a planned increase in output to ease supply concerns, with soaring gas prices spurring power producers to switch from gas to oil. The upcoming OPEC+ meeting on Monday will be crucial for oil price direction next week. A production increase beyond 400,000 bpd would see some short-term relief. Brent – 0.08% $ 78.25, WTI – 0.12% $ 74.93
Gold is softer this morning after rallying yesterday after an unexpected rise in weekly U.S. jobless claims number. Yesterday’s data showed a seasonally adjusted jobless claims of 362,000 for the week ended Sept. 25. Economists in a Reuters poll had forecast 335,000 applications. Gold did touch a one week high of $ 1764 an ounce yesterday, this morning it’s down 0.25% at $ 1752, Platinum is down 0.29 % at $ 964 and Palladium – 0.34% at $ 1906.