Asian Markets Dip, Futures Rise as Traders Mull Inflation

03/05/2021 U.S. equity futures climbed and stocks in Asia dropped Monday as investors assessed inflation risks amid improving economic activity. The dollar held onto gains. Volumes are light in the East as Markets in mainland China and Japan are closed for Golden Week, which continues until Thursday, while the UK is also enjoying a bank holiday. So we should expect light volumes on our market later today. Elsewhere, India’s virus crisis is worsening, with daily deaths hitting another record on Sunday. Prime Minister Narendra Modi has come under fire for his handling of the Covid-19 crisis and his party lost a key state election.

On Friday the JSE all share lost 0.68% to 66 937 points and the top 40 lost 0.67%. Banks dropped 3.07%, financials 1.93%, retailers 1.36% and resources 0.76%. Despite weaker world markets some of weekness could be related to month end rebalancing. The African National Congress’s national working committee is scheduled to meet and may discuss the status of the ruling party’s Secretary General, Ace Magashule, after the period given for him to step aside ended.

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ECONOMIC DATA:

• 11am: April Absa Manufacturing PMI, prior 57.4
• April Naamsa Vehicle Sales YoY, est. 62.9%, prior 31.8%
European stocks are expected to open higher on Monday on the first trading day of May, with the U.K. closed for the May Day public holiday. Germany’s DAX is expected to open 43 points higher at 15,179, France’s CAC 40 is seen 13 points up at 6,280 and Italy’s FTSE MIB is seen gaining 37 points at 24,178, according to IG. On a quiet day for European earnings, Siemens Healthineers releases its latest earnings report. Data releases include German annual retail sales in March and French export and import data for March.
In the U.S, despite Friday’s weakness in equities, the S&P 500 notched its third straight month of gains in April, adding more than 5% to the index as investors bet on a big economic and profit recovery from the pandemic. The S&P 500 is now up 11% for the year. The benchmark closed at record levels on Thursday on the heels of blowout earnings results from Apple and Facebook. The Dow rose about 2.7% last month, while the Nasdaq Composite gained 5.4% in April. On the day the Dow closed down 185 points, the S&P 500 down 30 points and the Nasdaq down 0.85%.
Here are some key events to watch this week:

• Fed Chair Powell speaks in an event hosted by the National Community Reinvestment Coalition
• The Reserve Bank of Australia monetary policy decision is due Tuesday
• The Treasury announces its quarterly refunding on Wednesday
• Chicago Fed President Charles Evans gives a virtual speech on the U.S. economy at an event hosted by Bard College; Cleveland Fed’s Loretta Mester speaks to the Boston Economic Club on Wednesday
• Bank of England rate decision Thursday
• U.S. April employment report is released on Friday.

In Asia the markets are lower with the HangSeng leading the way, down 1.44% , Tencent down just 0.16%, Australia has turned positive and is just 0.04% better. Markets in China, Japan and Thailand are closed on Monday for holidays.
Gold prices have ticked up, supported by a muted dollar ahead of a series of U.S. data, while auto-catalyst metal palladium held firm after surpassing $3,000 per ounce on concerns over supply shortage in the previous session. Spot gold was up 0.44% at $1776 per ounce,Palladium rose 0.17% to $2,946 per ounce, after scaling all time high of $3,007.73 per ounce on Friday. The dollar index was down 0.1% against its rivals, making gold less expensive for other currency holders.
Oil is softer with both Brent and WTI trading 0.75% lower. Brent $ 66.30 and WTI $ 63.11.