Stocks Mixed, Bonds Retreat Amid Inflation Worry, Iron Ore bounces

11/11/2021 Asian stocks are mixed this morning after the hottest U.S. inflation print in three decades hurt Wall Street shares and sparked a jump in Treasury yields amid concern monetary policy will be tightened more quickly. Concerns about price pressures brought forward expectations of interest-rate hikes. Treasury yields soared across the curve, with the 10-year yield up more than 10 basis points. The dollar was around a one-year high. Gold held its gains and Bitcoin was around $64,650 after dipping from a fresh all-time high yesterday. Oil steadied after a tumble caused partly by a surprise rise in U.S. stockpiles. There’s the Veteran’s Day holiday in the US today.

Locally, the Gold and Platinum names went through the roof as Gold and Platinum prices soared after the U.S. consumer prices accelerated in October, leading to the biggest annual gain in 31 years, more signs that inflation could stay uncomfortably high well into 2022 amid snarled global supply chains. The Rand lost 2.9% as most emerging market currencies sold off amid inflation concerns. The JSE AllShare rose 0.44% with the JSE Precious Metal index up 6.17%. ANG + 10.27%, GFI + 7.80% and AMS + 5.97%. Reatailers and Banks lost 0.96 and 0.31 percent respectively. NPN and PRX gave up earlier gains after Tencent reported after their close missing third quarter estimates, Tencent was up 4.12% before reporting and is down 2.81% this morning. We should be in for a mixed start as Asia is mixed , Tencent lower and US futures flat. IG Top 40 + 25 points. All eyes will be at newly appointed finance minister Enoch Godongwana as he makes his first medium-term budget policy statement later.

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EARNINGS:
• Gold Fields (GFI SJ), 3Q Gold AISC Per Ounce $1,016 vs $964 y/y, 606,000 ounces of attributable gold production, US$1,263 per ounce of all-in cost
• Harmony Gold (HAR SJ), 1Q Gold AISC Per Oz $1,691 Vs. $1,341 Y/y, production 413,714 oz, +32% y/y

• 9am: Foschini (TFG SJ), 1H
• 9am, Sappi (SAP SJ), FY
• 1:30pm: MultiChoice (MCG SJ), 1H

ECONOMIC DATA:
• 11:30am: Sept. Mining Production YoY, est. 2.7%, prior 2.0%
• 11:30am: Sept. Platinum Production YoY, prior 4.4%
• 11:30am: Sept. Gold Production YoY, prior 17.0%
• 1pm: Sept. Manufacturing Prod NSA YoY, est. -1.3%, prior 1.8%

European stocks are expected to open flat to lower as global markets digest the latest U.S. inflation data which showed faster-than-expected price rises. The FTSE is seen opening 4 points higher, the DAX 43 points lower and the CAC 22 points, according to data from IG. Earnings in Europe on Thursday come from Bilfinger, Delivery Hero, Merck, RWE, Siemens, Aviva, Tate & Lyle and Burberry, among others. Data releases include the latest U.K. gross domestic product data for the three months to September and U.K. industrial output for September.
In the US, the US consumer price index rose 6.2% from a year ago, the fastest annual pace in more than 30 years, and well above the market expectation of 5.9%. On a monthly basis, prices rose 0.9%, also above the 0.6% estimate. The major averages dipped after the hot inflation report pushed up bond yields. The rise in yields especially pressured growth pockets of the market. The Dow lost 240 points, dragged down by roughly 3% losses in Salesforce and Nike. The S&P 500 fell 0.8%. The Nasdaq was the relative underperformer, dipping 1.7% as Facebook-parent Meta Platforms, Amazon, Apple, Netflix, Microsoft and Google-parent Alphabet all closed lower. The small-cap benchmark Russell 2000 dropped 1.6% on Wednesday. Cash markets are closed today for the Veteran’s Day holiday.
Asia-Pacific stocks are mixed, after the inflation data out of the US. Shares of the China Evergrande Group listed in Hong Kong surged 5.49%, following a report from Chinese media outlet Cailianshe that several bondholders received coupon payments from the debt-ridden developer. Other real estate stocks in Hong Kong also rose, with China Vanke gaining 3.76% while Country Garden advanced 2.21%. The Hang Seng Properties index gained 1.68%. However, the broader Hang Seng index dipped 0.15%, not helped by Tencent being down 2.81% after missing third quarter estimates. Employment in Australia fell unexpectedly by 46,300 in October, seasonally adjusted estimates from the country’s Bureau of Statistics showed. That was far off analyst expectations for a 50,000 rise, according to Reuters. Unemployment also rose climbed to 5.2% higher than the 4.8% expected in a Reuters poll. The ASX 200 is down 0.57% with the Mining Index up 2.7%. MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 0.75%.
Gold prices are steady the after yesterday’s U.S. consumer prices drove the metal to a five-month peak, Bullions gains came despite the Dollar closing at its highest level in over a year. Gold Spot $ 1853 + 0.21%.
Oil prices are slightly better after falling in the previous session on concerns rising inflation in the United States, spurred by climbing energy costs, may prompt the government to release more strategic crude stockpiles to drive down prices. U.S. crude stocks rose last week the SPR injection while inventories of gasoline and distillates like diesel declined further, the Energy Information Administration said yesterday. Crude inventories rose by 1 million barrels in the week to Nov. 5, compared with analysts’ expectations for an increase of 2.1 million barrels. The SPR release was 3.1 million barrels, the largest since July 2017. Brent + 0.08% $ 82.71, WTI + 0.15% $ 81.46.
Iron ore futures in Singapore rose 2.6% to $90.15 a ton, following a 3.3% drop yesterday. Dalian futures gained 4.9%, while rebar climbed 3.2% and hot-rolled coil gained 4.3% in Shanghai.