Asia Shares Wary Of U.S. Inflation; US Futures Steady

24/05/2021 Asian shares got off to a cautious start on Monday, while Bitcoin tried to steady after being hammered on news of China’s crackdown on mining and trading of the cryptocurrency. Shares edged higher in Japan, with Hong Kong underperforming.
The stalling commodities boom remains in focus as China tries to temper speculation, with the nation vowing zero tolerance for price violations. Global equities have lost some steam and speculative enthusiasm for riskier investments like Bitcoin has declined after a prolonged rally from pandemic lows.

The rand gained for a second day on Friday, breaking R13.90/$ levels around 15H00 local time , as better-than-expected economic data from the eurozone boosted risk-on trade (Retails Sales incl. Auto 9.2% MoM vs 4.5%, Markit UK PMI 66.1 vs 60.8). The JSE gained 0.17% to 66,238 points, tracking European counterparts, while the Top-40 notched up 0.24%. Banks added 0.98%, financials 0.95% and industrials 0.6%. Precious metals fell 1.49%, listed property 1.21% and resources 0.58%.

Late Friday afternoon, Fitch Ratings and S&P both left their long-term sovereign credit ratings for SA unchanged at BB- (three levels below investment grade). S&P said that the nation’s credible central bank, flexible exchange rate and deep capital markets should counterbalance low economic growth and fiscal pressures. The agency highlighted the slow pace of economic reforms as well as reforms to “governance frameworks to reduce misuse and leakage of public funds”. S&P is forecasting economic growth for SA of 3.6% this year, moderating to 2.5% in 2022 and 1.3% in 2023. It expects inflation to average more than 4% this year driven by higher prices for food, electricity, oil and transport. Fitch sees the economy growing by 4.3% in 2021 and 2.5% in 2022.

Oil advanced above $64 a barrel as a storm formed in the Gulf of Mexico and signs the U.S. economy is rapidly bouncing back from the pandemic outweighed concern a revival of the Iranian nuclear deal will lead to an increase in global supply. Brent crude oil futures 45 cents, or 0.68%, to $66.89 a barre, while U.S. WTI was at $64.00 a barrel, up 43 cents, or 0.67%. Gold was up on Monday, trading near its highest level in four months as hints of a bullish trend start to emerge. Gold futures were up 0.16% to $1,884.19 after climbing up to $1.890.13.

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EU/UK/US
European stocks rose on Friday, near record highs despite continuing worries about inflation, as Swiss luxury goods maker Richemont rose following a proposal to double its dividend and automakers gained. The pan-European Stoxx 600 index rose 0.57%, London’s FTSE 100 was essentially flat despite a much bigger than expected jump in UK retail sales. Germany’s DAX saw the session out 0.44% firmer. German luxury carmaker BMW rose 1.2% after it said it would have to set aside Euro 1bn, less than initially feared, for expected European antitrust fines for alleged collusion with rivals.

U.S. stocks ended mostly lower on Friday, weighed down by technology and consumer discretionary shares, while the dollar edged higher after stronger-than-expected U.S. manufacturing data. U.S. manufacturing PMI increased to 61.5, the highest reading since October 2009, and followed a final reading of 60.5 in April. Economists polled forecast the index dipping to 60.2 in early May. The Dow rose 123 points, or 0.38%,while the S&P 500 0.08% and the Nasdaq gave up 0.48% at the close.

Here are some events this week week:
• Bank of Indonesia rate decision Tuesday, Reserve Bank of New Zealand policy decision Wednesday, Bank of Korea rate decision Thursday.
• CEOs of the largest U.S. banks, including JPMorgan and Goldman Sachs, will testify before lawmakers in the Senate Banking and House Financial Services committees Wednesday.
• U.S. initial jobless claims, GDP, durable goods, pending home sales, Thursday.

ASIA
MSCI’s broadest index of Asia-Pacific shares outside Japan firm 0.42% in slow trade. Asian shares were mostly higher Monday, echoing Wall Street’s mixed close last week. Japan’s benchmark Nikkei added 0.42% in morning trading, while Australia’s ASX 200 inched up 0.25%. Hong Kong’s Hang Seng slipped 0.4%, while the Shanghai Composite advanced 0.16%. Although Japanese shares were higher, risks remain as the government prepares to extend a “state of emergency” to curb coronavirus infections in some areas, beyond the initial ending date of May 31