02/06/2021 A gauge of Asian stocks was steady Wednesday after U.S. equities inched lower as the tussle between economic optimism and inflation concern continues to play out in markets. US Futures are flat and Oil rises to a more than two-year peak, with OPEC+ providing an upbeat demand assessment and the prospect of a speedy return of Iranian barrels waning.
Locally the All Share breached the 69 000 level briefly but closed just below the level at a new record close of 68 922 up 1.41% on the day. Sasol leading the gainers up 6.37% and Sibanye up 4.4% after announcing a R 10bln share buyback. We should see the local market open flat to slightly better as Tencent trades up 0.48%, precious metals are a touch softer and IG markets Top 40 trades up just 26 points.
South Africa named three additional preferred bidders to provide emergency power as the state-run electricity utility continues to implement rolling blackouts that are weighing on the economy.
• S. Africa Unemployment at New High as Building, Trade Cut Jobs
• Iran’s Push to Lift Sanctions Boosts MTN’s Plan to Withdraw Cash
• South African Factory PMI at Seven-Month High Signals Growth
• Bidvest Sees FY Earnings Exceeding Prior Financial Year
• R500m owed to staff: Denel veers closer to collapse as key business unit fails to pay full salaries
• ArcelorMittal SA back on track to supply industry
European stocks are expected to see a cautious start to the trading day, continuing a lackluster start to trading in June. London’s FTSE is seen opening 3 points lower, Germany’s DAX is seen 20 points higher, France’s CAC 40 up 3 points at 6,491 and Italy’s FTSE MIB 4 points higher according to IG markets. The cautious start for European markets follows similar sentiment elsewhere following muted action stateside on the first day of June, although there were some gainers during the session, notably in stocks connected to the reopening. Airline and cruise operator companies saw their stocks jump as Covid cases in the U.S. continue to decline.
Overnight in the US, the Dow gained 47 points, or 0.14%, after rising more than 300 points at one point. The S&P broke a 3-day win streak to close down just 2 points. The Nasdaq Composite was the relative underperformer, shedding 0.09% for its second negative session in three. Inflation fears, and the ways in which the Federal Reserve might respond, have weighed on sentiment recently, although the major averages are still hovering around all-time highs. The S&P 500 and Dow are down 0.8% and 1.5%, respectively, from their May records. The Nasdaq has a little more ground to make up following a rotation out of growth-oriented areas of the market. The tech-heavy index is currently 3.3% from its April all-time high.
Here are key events to watch this week:
• Philadelphia Fed President Patrick Harker, Chicago Fed President Charles Evans, Atlanta Fed President Raphael Bostic and Dallas Fed President Robert Kaplan speak later today.
• U.S. employment report for May on Friday
Shares in Asia-Pacific were mixed in Wednesday trade, with official data showing higher-than-expected growth in Australia’s economy for the first quarter. The ASX 200 is up 0.99%, the rest of the region is mixed with Mainland China, the Hang Seng down and the Nikkei up 0.45%. MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.24%.
Oil extended gains after closing at the highest since October 2018 as OPEC+ provided an upbeat assessment of the demand outlook and the prospect of a speedy return of Iranian barrels to the market waned. Brent + 0.43% $ 70.49, WTI + 0.25% $ 67.89.
Gold slipped from the highest level in almost five months as investors continued to weigh optimism over the economic recovery against inflation concerns ahead of a key jobs report on Friday.
Data released Tuesday showed a gauge of U.S. manufacturing quickened in May, propelled by stronger growth in orders. That boosted yields on 10-year Treasuries, which weighed on demand for non-interest-bearing bullion. Spot Gold dipped back below the $ 1900 level to $ 1898, Platinum $ 1187 and Palladium $ 2848.