Stocks Steady, U.S. Futures Rise; Treasuries Slip

22/11/2021 Asian stocks were steady and U.S. futures rose as traders weighed European Covid curbs and the risk of a faster Federal Reserve taper. The Treasury yield curve was near the flattest since the pandemic began. Shares fell in Japan Monday but rose in South Korea — which got a fillip from export gains — and in China, where the central bank indicated possible easing steps to support a slowing economy. U.S. futures climbed after economically sensitive sectors led the S&P 500 lower Friday, while the technology-heavy Nasdaq 100 outperformed in an echo of the stay- at-home trade. Treasuries trimmed a rally and the gap between yields on five-year and 30-year maturities was around the lowest since March 2020. Bonds were bolstered Friday on risk aversion as surging European infections pushed Austria toward a lockdown and spurred Germany to tighten curbs. The curve flattened in part on signs the Fed may consider a faster drawdown of its bond-buying program. The euro was among the worst performers in the Group-of-10 basket, with the yen also lower.
Oil erased declines as traders wait to see if nations release supplies from strategic reserves. Gold steadied following a weekly retreat, Silver and platinum rose slightly, while palladium edged higher. Aluminum fell 0.6% to $2,663.50 a metric ton on London Metal Exchange; with Copper declining 0.4% to $9,605. Iron ore futures are 0.5% higher.
Tencent trades 0.89% lower in Hong Kong. The Rand still remain weak at around the 15.72 level vs the USD. The FTSE JSE Top 40 futures are indicating a slightly better start, up 220 points or 0.35%.
Here are some events to watch this week:

  • Eurozone, U.S. PMI data Tuesday
  • Reserve Bank of New Zealand rate decision Wednesday
  • U.S. FOMC minutes, consumer income, wholesale inventories, new home sales, GDP, initial jobless claims, U.S. durable goods, University of Michigan consumer sentiment. All Wednesday
  • Bank of Korea policy decision Thursday
  • U.S. Thanksgiving Day: U.S. equity, bond markets closed Thursday
  • Bank of England Governor Andrew Bailey speaks with Mohamed El Erian at a Cambridge Union event. Thursday
    Locally on Friday the FTSE/JSE Africa All-Share Index closed down 0.7% to 70,376, with banks and retailers weighing the most, down 2.01% and 2.19% respectively. The sell-off came after the SARB hiked interest rates by 25 bps and as new Covid curbs in Austria and Germany weighed on sentiment. The Rand was down 0.5% to 15.72 per US$, with the Yield on 10-year govt rand bonds that rose 2.40 bps to 9.98%.
    Naspers announces first-half earnings. The company said on Nov. 16 headline earnings are expected to decrease 5% to 12% to a loss, with Core HEPS Rising 8%-15%.
  • FX Traders Seek Emerging-Market Gems Amid the Wreckage of 2021
  • South African Minister Says Eskom Delaying Projects: City Press
  • Moody’s Downgrades Two South African Cities Due to Cash Crunch
  • South Africa Heading for Lower-Middle-Income Status, Model Shows
  • D. E. Shaw Takes 0.51% Short Position in Thungela Resources Ltd
  • Florida SBA Backs African Rainbow Minerals on 13 of 22 Proposals
  • Pepkor Cut to Hold at Investec; PT 25.40 rand


  • Barloworld Ltd. (BAW SJ)
  • Naspers Ltd. (NPN SJ)
  • Netcare Ltd. (NTC SJ)
  • Omnia Holdings Ltd. (OMN SJ)
  • Prosus NV (PRX NA)


  • 10am: Bloomberg Nov. South Africa Economic Survey


  • South African President Cyril Ramaphosa hosts Kenyan President Uhuru Kenyatta


  • Earnings Calls: NTC SJ
    European markets closed lower on Friday, with investors rattled as countries impose strict measures to tackle the latest wave of Covid-19 infections. The pan-European Stoxx 600 closed down by 0.3%, having started the day on a positive note. Europe’s banking index was among the worst performers, plunging 2.3% following comments from European Central Bank President Christine Lagarde. The rapid spread of Covid in Europe is once again front and center, with multiple countries experiencing record daily caseloads, imposing partial lockdowns and tightening rules on the unvaccinated. Germany on Thursday announced more restrictions for unvaccinated people as a fourth wave sent cases to a record, before Austria announced Friday that it will re-enter a full national lockdown. Austria’s ATX index plunged 3.1%, suffering its worst day in more than a year. ECB President Lagarde on Friday reinforced her view that euro zone inflation will fade, and said the ECB should not look to tighten monetary policy as it could hamper the bloc’s recovery. As well as taking some of the wind out of the stock market’s sails, Lagarde’s comments and the news of new Covid restrictions dented the euro gave up 0.5% to the dollar. On the data front, U.K. retail sales increased 0.8% month-on-month in October, slightly exceeding the 0.5% expected by economists in a Reuters poll. Excluding fuel, sales grew by 1.6% on the month against a 0.6% forecast, with the country facing spiking energy prices. Investors were also monitoring the latter stages of corporate earnings season, with Kingfisher among those reporting on Friday. The British retailer posted a 2.4% slide in third-quarter sales but said the final quarter of the year was off to a strong start. Kingfisher shares fell 4.6%. Shares of British online grocer Ocado climbed 6.8% following news of fresh Covid-19 restrictions in Europe. Online supermarkets and food delivery companies advanced across the board. Meanwhile the news sent British Airways parent IAG and airplane engine manufacturer Rolls Royce tumbling almost 4% amid a broad decline for travel stocks. In the banking sector, Deutsche Bank fell 4.9% following Lagarde’s interest rate remarks. At the top of the Stoxx 600, British e-commerce company THG jumped 8.8%. It comes after a Sky News report on Wednesday which said investment bank Numis retracted allegations about accounting irregularities at THG.

Stocks struggled on Friday as concerns over a resurgence of Covid-19 weighed on global markets, though tech shares pushed higher. The Dow Jones Industrial Average fell 268.97 points, or 0.75%, to 35,601.98. The S&P 500 ticked 0.14% lower to 4,697.96. The Nasdaq Composite advanced 0.40% to 16,057.44. The S&P 500 still ended the week 0.3% higher. A slew of stellar earnings reports from big retailers and strong U.S. retail data helped the broad-market index fight heightened concerns about inflation and gave it a leg up when Covid worries emerged. The blue-chip Dow fell 1.3% for the week, while the tech-heavy Nasdaq Composite got a 1.2% boost. Equities took a hit after Austria announced early in the day that it would re-enter a full national lockdown due to a spike in Covid cases. That followed new restrictions for unvaccinated people in Germany, introduced Thursday as a fourth wave sent daily cases to a record high. Shares of air carriers were among the first to drop. United Airlines fell 2.7%, while Delta fell 1%. Boeing lost 5.7%. In other travel names, Airbnb dropped 3.8% while Booking Holdings dipped 1.5%. Expedia was also down slightly. Norwegian Cruise Line Holdings was about 2% lower, and Royal Caribbean slipped 2.9%. Big energy companies dominated the top decliners in the S&P 500 as demand concerns related to new lockdown orders hurt oil prices, which were already in a slump. Devon Energy fell 6.2%, and Hess fell about 5.7%. Baker Hughes and Diamondback Energy weren’t far behind, down more than 5%. Meanwhile, shares of Moderna jumped nearly 5% after the Food and Drug Administration cleared its vaccine booster shot for all adults in the U.S. Intuit led the S&P 500 higher after posting stronger-than-expected quarterly results Friday that sent its shares soaring by about 10%. The TurboTax developer also raised its full-year revenue guidance. Nvidia also continued its strong run, with shares rising 4% on continued momentum from its earnings beat earlier this week. Tech shares broadly continued their rally as U.S. Treasury yields fell and Covid-concerned investors rotated out of banks, energy companies and other value stocks, and into super-cap tech names. Adobe and Meta Platforms were among the notable gainers in the S&P 500 for much of the day, along with Nvidia. Microsoft and Apple were also higher.

Shares in Asia-Pacific were mixed in Monday trade as China kept its benchmark lending rate unchanged. The Hang Seng index in Hong Kong dipped 0.42%. Hong Kong-listed shares of and Netease gained 1.87% and 3.02%, respectively, following a Friday announcement that the two stocks are set to be included in the benchmark Hang Seng index from Dec. 6. In mainland China, the Shanghai composite rose 0.65% while the Shenzhen component advanced 1.161%. China on Monday kept the one-year Loan Prime Rate (LPR) unchanged at 3.85%. The five-year LPR was also left steady at 4.65%. In Japan, the Nikkei 225 fell 0.2% while the Topix index declined 0.25. Over in South Korea, the Kospi gained 1.21% as shares of industry heavyweight Samsung Electronics soared about 5%. The Straits Times index in Singapore also rose 0.28%. Australian stocks declined as the S&P/ASX 200 fell 0.39. MSCI’s broadest index of Asia-Pacific shares outside Japan traded little changed.

Gold steadied following a weekly retreat, with traders weighing fresh virus curbs in Europe against the prospect of a quicker withdrawal of Federal Reserve stimulus. Governments across Europe are introducing strict measures to contain a new coronavirus wave. That’s adding to economic risks and offering some haven support for gold after bullion fell last week on bets the Fed will speed up tightening at their next policy meeting. Spot gold was flat at $1,846.82 an ounce, after falling 1% last week. Silver and platinum rose slightly, while palladium edged higher.
Oil extended declines — after four weeks of losses — on signs the U.S., China and Japan are all preparing to tap national crude reserves as concerns over accelerating inflation intensify. Futures in New York dipped below $76 a barrel after losing almost 6% last week. U.S. President Joe Biden has been talking about a possible release from the Strategic Petroleum Reserve for several weeks, and Japan’s TV Asahi reported Monday that Tokyo is preparing to release crude from its national stockpiles as part of a joint effort with the U.S. The return of virus restrictions in Europe, meanwhile, suggests there could still be a threat to global energy demand from a resurgent Covid-19. Austria goes into a full lockdown on Monday, while Germany and other nations are cracking down on the unvaccinated as cases spike.
Aluminum fell as investors weigh easing supply disruptions in China with the potential of demand to be affected by new Covid curbs in Europe, along with the possibility of a more-rapid withdrawal of Federal Reserve stimulus. Aluminum fell 0.6% to $2,663.50 a metric ton on London Metal Exchange. Copper declined 0.4% to $9,605.

In the ferrous market, investors continued to weigh the expectations of policy easing on China’s embattled property sector with the output and pollution cuts in the world’s biggest steel industry. Iron ore futures rose 0.5% to $91.50 a ton in Singapore after jumping 5.6% on Friday. while prices in Dalian also gained. Steel rebar also advanced and hot-rolled coil rose in Shanghai.