Global Bond Selloff Eases; Asian Stocks Slump; Dow Drops More Than 500 Points

26/02/2021 Global bonds attempted to recover from an aggressive selloff that drove steep losses in Treasuries and U.S. stocks yesterday. Asian stocks under pressure this morning and U.S. and European futures pointing lower. Benchmark Treasury yields fell back below 1.5% and their Australian equivalents swung amid an unscheduled purchase operation from the country’s central bank. The U.S. 10-year yield traded as high as 1.6% yesterday, when a poorly received government auction led to forced selling by holders of mortgage securities. Japan’s benchmark hovered near its highest level since early 2016. The dollar extended overnight gains. Stocks dropped more than 2% in Japan, South Korea and Hong Kong, and were weaker across the region. S&P 500 futures slipped after the benchmark closed down 2.5% with tech shares leading losses. The Nasdaq 100 tumbled 3.6%, the most since October, as investors rotated into companies poised to benefit from an end to lockdowns Tencent trades 2.9% lower in HK.

Data on money supply and credit extension, the trade balance and the monthly budget balance will be released.

  • Gold Extends Decline as Rising Bond Yields Curb Metal’s Appeal
  • Woolworths Sees Food Sales Growth Despite Shoprite Competition
  • Johannesburg Platinum Stocks Soar After Disruption at Nornickel
  • Mondi Weighs Deal for $8 Billion Packaging Rival DS Smith
  • S. Africa Stocks Surge to Record as Anglo Results Beat Estimates
  • JPMorgan Overweight Call on S. Africa Stocks Bolstered by Budget
  • Implats Plans to Spend 10b Rand to Raise Output at Two Projects
  • JSE FY Profit After Tax 778M Rand Vs. 695M Rand Y/y
  • Nedbank ‘Constructive’ on S. Africa Shares; Favors Miners, Banks
  • Royal Bafokeng Sees FY Earnings Soaring as Production Increases
  • Mondi FY Adjusted Operating Profit Beats Estimates
  • Anglo American FY Adjusted EPS Beats Estimates
  • Liberty Sees FY Earnings Swinging Into Losses
  • Discovery 1H Net Income 1.84B Rand Vs. 2.04B Rand Y/y
  • Exxaro Sells 19.1m Tronox Shares at $18.25/share for $332m
  • Truworths Cut to Hold at HSBC; PT 50 rand


  • Blue Label Telecoms Ltd. (BLU SJ)
  • City Lodge Hotels Ltd. (CLH SJ)


  • Jan. Money Supply M3 YoY rises 9.15%, est. 9.50%, prior 9.48%
  • Jan. Private Sector Credit YoY rises 3.26%, est. 3.70%, prior 3.55%
  • 2pm: Jan. Trade Balance Rand, est. 21b, prior 32b
  • 2pm: Jan. Monthly Budget Balance, est. -45.1b, prior 5.1b


  • 11am:South Africa to sell 2 billion rand of inflation-linked bonds due 2033, 2038, 2046
  • 1pm: South Africa to Sell 4.44 Billion Rand 364-day Bills
  • 1pm: South Africa to Sell 4.04 Billion Rand 273-day Bills
  • 1pm: South Africa to Sell 3.07 Billion Rand 182-day Bills
  • 1pm: South Africa to Sell 1.4 Billion Rand of 91-day Bills


  • Earnings Calls: BLU SJ, JSE SJ, MSP SJ
  • Sales Results: SNH GR

European stocks closed lower yesterday as investors grew wary of rising U.S. bond yields. The pan-European Stoxx 600 fell 0.27%, with chemicals shares falling 1.8% to lead losses as most sectors and major bourses finished in negative territory. It was a busy day for earnings in Europe, with the world’s largest brewer Anheuser-Busch InBev, Veolia, AXA, Bayer, Standard Chartered, Aston Martin, Telefonica and Adecco Group all reporting before the bell. AB InBev forecast higher revenues in 2021, but also projected inflated costs and a possible hit to margins, sending the company’s stock 6% lower. Standard Chartered reaffirmed its long-term profit targets and restored its dividend Thursday, though higher credit impairments due to the Covid-19 pandemic led to a 57% fall in annual profit for 2020, missing analysts’ expectations. The British lender’s stock fell 6%. Italy’s Tenaris was the biggest mover, jumping more than 13% after initially failing to start trading following the steel pipe manufacturer’s bumper fourth-quarter earnings report. At the bottom of the European blue chip index, British livestock genetics company Genus slid 5% after highlighting short-term challenges in its efforts to restock China’s pig farming industry.
U.S. stocks fell sharply last night as an outsized surge in bond yields spooked investors, who rushed to dump risk assets, especially high-flying technology names. The Dow Jones Industrial Average dropped 559 points, or 1.8%, to 31,402, slipping from a record high. The S&P 500 lost 2.5% to 3,829 in its worst day since Jan. 27. The tech-heavy Nasdaq Composite slid 3.5% to 13,119, posting its biggest sell-off since Oct. 28. Alphabet, Facebook, and Apple all fell more than 3%, while Tesla dropped 8.1%. Microsoft shed 2%. The major averages tumbled in a rapid fashion as the 10-year Treasury yield soared as high as 1.6% in a sudden move that some described as a “flash” spike. The yield later settled back down to around 1.52%, its highest level since February 2020. U.S. data releases were also watched carefully by global investors Thursday for more clues on the state of the American economy: initial jobless claims fell sharply to 730,000 for the week ended Feb. 20, well below the Dow Jones estimate of 845,000. Investors are rotating into areas of the market that would benefit from an economic reopening the most. Energy has gained 6.8% this week alone, the biggest winner by far. Industrials and financials are the only two other sectors in the green week to date.
Stocks in Asia-Pacific fell sharply in morning trade following an overnight drop on Wall Street as a rapid rise in bond yields rattled investor sentiment. In Japan, the Nikkei 225 led losses among the region’s major markets as it fell 3.99% to close at 28,966.01 while the Topix index slipped 3.2% to finish its trading day at 1,864.49. South Korea’s Kospi dropped 3.06%. Hong Kong’s Hang Seng index plunged 2.89% in afternoon trade. Mainland Chinese stocks also fell: The Shanghai composite was down 1.62% while the Shenzhen component slipped 1.662%. Australia’s S&P/ASX 200 also saw sizable losses as it fell 2.35% to close at 6,673.30. MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 2.99%.
Gold headed for a second monthly decline as a surge in bond yields curbed the metal’s appeal, even as some Federal Reserve officials stressed that the central bank has no plans to tighten policy prematurely. Spot gold was steady at $1,770.91 by 10:01 a.m. in Singapore after slumping 1.9% on Thursday. This month it’s lost 4.2%. Silver dropped, while platinum and palladium both advanced.
Oil is heading for a fourth monthly gain with the global market tightening as investors await the OPEC+ meeting next week, watching for any changes to production strategy following a surge in prices. West Texas Intermediate for April delivery fell 1.4% to $62.66 a barrel on the New York Mercantile Exchange at 1:34 p.m. in Singapore after closing at the highest since May 2019 on Thursday.
Chinese copper smelters grappling with a shortage of semi-processed material are set to see an influx of supply from South America, a sign that the tightness helping supercharge the metal’s rally may be easing. Starting next month, there’ll be a large number of ships arriving at Chinese ports from Chile and Peru, the nation’s main suppliers, as bottlenecks ease, according to IHS Markit lead shipping analyst Daejin Lee Copper is nearing a record and heading for an unprecedented 11th monthly gain on expectations that a rebound in growth, aided by government pledges to invest in green infrastructure, will spur a deficit.
China’s benchmark iron ore futures rose on Friday and the market was on course for a more than 3% weekly jump, while steel rebar and hot rolled coil were also set to log gains for the week as downstream consumption continued to pick up.
Some key events to watch

  • Finance ministers and central bankers from the Group of 20 will meet virtually Friday. U.S. Treasury Secretary Janet Yellen will be among the attendees.