China Leads Asian Stock Selloff

04/03/2021 Asian stocks fell with U.S. futures this morning after an overnight surge in sovereign bond yields once more dragged down shares on Wall Street. Treasuries held those losses and the dollar ticked higher. China led losses amid the worst drop in MSCI Inc.’s Asia-Pacific gauge this week. The technology sector struggled while real estate, finance and energy shares outperformed, part of a global shift to value segments. S&P 500 and Nasdaq 100 futures dipped after a slump in the indexes took the tech-heavy gauge to a two-month low. Declines in Apple Inc. and Amazon outweighed gains in banks and energy producers.

Locally we had a 1077 point swing from top left to bottom right as the market closed near its lows of the day, the Allshare traded at an all-time high of 69403 in early morning trade before closing at 68326 down 0.27%. The ZAR has weakened this morning to R 21.04/GBP and R 15.09/$, we in for a messy start with Asia lower, US and European Futures lower and Tencent down 3.73%. IG Top 40 is down 573 points.

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European stocks whipsawed yesterday as investors monitored U.S. Treasury yield movement while reacting to earnings and the U.K.’s latest budget statement. The pan-European Stoxx 600 provisionally closed flat, having earlier been up by as much as 0.7%. London’s FTSE 100 index was the standout gainer, climbing 0.8% following British Finance Minister Rishi Sunak’s budget speech. Britain’s finance minister announced Wednesday that U.K. corporation tax will increase to 25% in April 2023 as the government looks to restore public finances in the aftermath of the Covid-19 pandemic. Sunak announced a further £65 billion worth of fiscal measures for 2021/22, bringing the government’s total response since the onset of the pandemic to £407 billion.
Overnight in the U.S stocks posted heavy losses as rising bond yields spooked investors. The S&P 500 dipped 1.3%, while the Dow closed 119 points, or 0.38%, lower. The Nasdaq was the underperformer, falling 2.7% as tech names declined. The index is on track to post its third straight negative week, the longest weekly losing streak since September. The weakness came as the 10-year Treasury yield extended gains. The benchmark rate climbed to a high of 1.49% before retreating slightly. Last week, the yield surged to a high of 1.6% in a move that some described as a “flash” spike. During the sell-off, one bright spot was companies tied to the economy’s reopening. Shares of airline and cruise line operators advanced after President Joe Biden said Tuesday that the U.S. will have enough Covid-19 vaccines for all adults by the end of May.
Later today investors will get another look at the ongoing economic recovery when first-time jobless claims data for the week ending Feb. 27 is released. Economists surveyed by Dow Jones are forecasting 750,000 first-time filers.
Shares in Asia-Pacific are lower across the region following overnight declines on Wall Street as bond yields rose again. The Hang Seng is 2.45% lower with Tencent down 3.73%, China Mainland, the Shanghai composite down 1.65% and the Shenzhen component dropped 3.034%. Shares in Australia also declined as the S&P/ASX 200 fell 0.84%. Australia’s January retail sales increased 0.5% month on month on a seasonally adjusted basis. That compared to expectations for a 0.6% increase in a Reuters poll.
Gold prices edged up on Thursday to recover from a near nine-month low hit in the previous session, although higher U.S. Treasury yields continued to weigh on the non-yielding bullion’s appeal. Spot gold is up 0.42% at $1718 per ounce, having dropped to their lowest since June 9 at $1,701.40 yesterday. Palladium is up 0.21% at $ 2360 and Platinum has gained 0.29% to $1171.
Oil prices rose for a second straight session as the possibility that OPEC+ producers might decide against increasing output at a key meeting later in the day lent support alongside a drop in U.S. fuel inventories. U.S. crude oil stockpiles surged by a record of more than 21 million barrels last week as refining plunged to an all-time low due to the Texas freeze that knocked out power for millions. With refiners unable to process crude, gasoline and distillate inventories also dropped dramatically, especially in the Gulf Coast region where their declines set records, according to the U.S. Energy Information Administration. Brent is up 0.75% at $ 64.53 and WTI is up 0.64% at $ 61.66.