Asia-pacific Markets Reverse Gains, Evergrande Share Trading Suspended, Shanghai Close For Week-long Holiday

04/10/2021 Equities markets dipped on Monday in Asia as concerns about China’s property sector and inflation worries offset upbeat U.S. data. Trading in shares China’s Evergrande was suspended after it missed a key interest payment on its offshore debt obligation for the second time last week. Authorities are regulating housing loans and lending to property firms. MSCI’s broadest index of Asia-Pacific shares ex. Japan fell 0.29%. Hong Kong led the decline in the region, Japan’s Nikkei erased earlier gains, China is closed for week-long holidays, while Australian shares bucked the trend. U.S and European contracts on the backfoot, the dollar steadied, Treasuries fluctuated with 10-year yields inching up to 1.47%. Tencent -down 1%, Top-40 futures in the red 0.20%. The rand steady at R14.89/$, regaining 0.55% for the week.
OIL: prices fell on Monday ahead of a meeting by OPEC and its allies. Brent was down 5 cents or 0.06% at $79.21 per barrel. It rose 1.5% last week, its fourth weekly gain in a row. WTI dropped by 13 cents or 0.18% to $75.73, after gaining for the past six weeks. Oil prices have risen due to the supply disruptions and a rise in global demand, pushing Brent last week above $80 to a near three-year high.

GOLD: the bullion steadied around $1,761.08 on Monday. On Friday the U.S. personal consumption expenditures price gauge, which the Federal Reserve uses for its inflation target, rose the most on an annual basis in three decades, fuelling concerns that price increases will last longer than expected and eventually hit consumer spending.
Here are some events to watch this week:
• OPEC+ meets virtually Monday to review output policy amid a global energy crunch.
• Reserve Bank of Australia policy decision Tuesday
• The U.S. Labor Department releases unemployment and job creation data Friday
• Annual Nobel announcements start on Monday, with the Peace Prize being awarded on Friday

The JSE closed weaker on Friday, fell 0.97% to 63,661 points as inflation worries remain a concern. The Top-40 slipped 1.03%. Retailers lost 2.3%, banks 0.53%, resources 1.5% and listed property 1.25%. Leisure stocks got a boost on Friday after the President announced, on Thursday, a move to level 1 lockdown. City Lodge led the gains in its sector, rup 6.35% to R4.19. Sun International added 5.19% to R20.67, Tsogo Sun Hotels 4.92% to R3.20.

South Africa’s government expects the economy to return to pre-virus levels by the end of 2022, Finance Minister Enoch Godongwana said in National Treasury’s annual report published on its website Friday. That compares with the Treasury’s February estimate of late 2023.
NEWS:
• South Africa Factory Mood Stabilizes After Riot-Driven Swings
• China Is Sending Shockwaves Through South African Markets
• South African President Ramaphosa to Skip Climate Conference
EQUITY PREVIEW:
• Nedbank Adjusts Rand View Weaker Amid Risk From U.S. Rates
• S. Africa’s AMCU Union Says Strike at Sibanye ‘Last Resort’

EU/UK/US
European markets finished the week on a down note as persistent worries about an economic slowdown and rising inflation rattled investors. The pan-European Stoxx 600 index fell 0.42% with most major regional bourses lower alongside.
Germany’s Dax dropped 0.68%, with the Cac-40 drifting down 0.04%, London’s FTSE slipping 0.84% at the close. BofA Global Research cut its outlook for European stocks, predicting a decline of nearly 10% by year-end given a shift in the macro backdrop where slowing growth is accompanied by higher discount rates.
Speaking on the first day of the Conservative Party conference in Manchester, Boris Johnson suggested it could be months before supply chains get back to normal. Food and fuel shortages could continue until Christmas, the prime minister admitted but vowed to keep “all options on the table” to resolve the issue.

The S&P 500 closed higher Friday after promising results for a Covid-19 pill and positive manufacturing data triggered a rally in companies that stand to benefit from an economic reopening. The benchmark notched up 1.15%, alongside the Dow closing 1.43% in the green, while the Nasdaq firmed 0.82% at the close. Personal consumption expenditures increased at a month-on-month pace of 0.2%, as expected, while so-called personal consumption expenditures jumped 0.8% against July (consensus: 0.7%). Also in focus was news that Congress was now poised to prevent a government shutdown, with both the Senate and the House passing a short-term appropriations bill that will allow the government to keep operating until 3 December. The bill is currently sitting on Joe Biden’s desk awaiting his signature. U.S. futures are currently in the doldrums: Dow – 0.22%, S&P500 – 0.36%, Nasdaq -0.59%.

ASIA
Hong Kong shares dropped on Monday, investors were closely watching beleaguered Evergrande, whose shares were suspended ahead of an announcement about a major transaction. The Hang Seng Index fell 2.25%. Mainland Chinese markets were closed for a public holiday. Japanese shares reversed early gains as caution ahead of the formation of a new government. The Nikkei share average lost 1.14%. Australian shares jumped on Monday after four consecutive weekly falls, as financials tracked Wall Street higher and energy stocks jumped on strong underlying commodity prices. The benchmark S&P/ASX 200 index rose 1.1%.