28/06/2021 Asia stocks are slightly lower, with U.S. futures steady this morning, as investors are weighing the pace of economic recovery against more potent Covid-19 strains and central banks mulling stimulus reductions. The dollar edged higher. Southeast Asian markets underperformed, led by Malaysia, where a nationwide lockdown was extended. Australia saw a modest dip despite a lockdown in Sydney to contain outbreaks of the highly contagious Delta strain. Japan and China fluctuated. Hong Kong will open for trading in the afternoon after the morning session was canceled because of a rain storm warning. European futures were little changed. The S&P 500 had its best week since February. Treasuries held losses. Cryptocurrencies will be closely watched after the U.K. restricted an affiliate of crypto exchange Binance from doing business in the country. Bitcoin rose for a second day, trading in the mid-$30,000s range in Asia on Monday. Global stocks are trading near a record high as anxiety about the Federal Reserve’s hawkish tilt eased, with investors dialing back concerns that U.S. policy makers will rush to boost interest rates despite mounting inflation pressures. Volatility receded, with the Cboe Volatility Index, or the VIX, sinking to pre-pandemic levels. Still, markets remain sensitive to more central banks debating the withdrawal of emergency stimulus. Tencent trades 0.85% lower in HK. The JSE Top 40 futures are indicating a slightly lower start down 110 points or 0.18%, with the Rand steady at 14.17 vs the USD.
Here are key events
- OECD meets in Paris to finalize a proposal to overhaul global minimum corporate taxation Wednesday
- China’s President Xi Jinping will deliver a speech as the nation marks the 100th anniversary of the founding of the Chinese Communist Party Thursday
- OPEC+ ministerial meeting Thursday
- ECB President Christine Lagarde speaks Friday
- The U.S. jobs report is forecast to show an acceleration in payrolls growth in June Friday
The FTSE/JSE Africa All-Share Index closed little changed at 66,215, with the bank and property sectors that managed to close in the green, up 0.86% and 0.99% respectively. The precious metals and mining index weighed, closing down 1.1%, with heavyweights Naspers and Prosus also ending the session in the red, down 0.83% and 0.5% respectively. The Rand was up 0.7% to 14.11 per US$, with the Yield on 10-year govt rand bonds that rose 7.60 bps to 9.34%.
South Africa implements stricter lockdown rules for 14 days to curb the spread of coronavirus amid a third wave and rising infections. Restrictions include a ban on the sale of alcohol and public gatherings. Other curbs include school closures, limiting travel to and from Gauteng, the nation’s commercial hub that’s been hardest- hit by the rise in Covid-19 cases.
- South Africa Bans Alcohol, Shuts Schools to Curb Virus Surge
- Africa Could Produce Covid-19 mRNA Vaccines Within 15 Months
- South Africa’s Eskom Makes Final Offer of 1.5% Wage Increase
- S. Africa’s EFF Marches to Demand Russia, China Vaccine Approval
- EQUITY PREVIEW:
- JSE First-Half HEPS Expected to Be Between 24%-32% Lower, stock heads for 7-Month low after update
- Prosus’s Swap Plan Gets Thumbs Down From ISS Special Situations
- Steinhoff 1H Net Loss Narrows to 404m Euros vs 1.5b Euros y/y
- Iron Ore Miners to Ship 3.1% More in 2Q Than Prior Q: Bernstein
- MEDIA SUMMARIES:
- Business Day.za: Walmart throws Massmart another lifeline
- Business Day.za: SA on its way to meeting land reform targets, says Trevor Manuel
- 10am: 2Q BER Consumer Confidence, prior -9
- Annual General Meetings: PIK SJ
European stocks climbed on Friday to close out a winning week amid the prospect of a steady economic rebound and fears of a tapering of monetary stimulus. The pan-European Stoxx 600 eked out a 0.1% gain Friday, bringing its weekly gain to 1.2%. the U.K. is set to publish plans next month to lift travel restrictions for fully vaccinated people, except those at the highest Covid-19 risk level. Meanwhile, the Bank of England on Thursday forecast inflation surpassing 3% at its peak before cooling down, but insisted the spike above its 2% target would be transitory and kept its monetary stimulus at full throttle. Germany’s GFK consumer sentiment index, published before the bell Friday, showed consumer confidence in Europe’s largest economy rising to -0.3 points heading into July, vastly outstripping a consensus forecast of -4.0, and up from -6.9 the previous month. In terms of individual share price movement, Adidas climbed 6.4% to lead the Stoxx 600 after U.S. rival Nike beat quarterly profit expectations and offered a strong full-year forecast. At the bottom of the index, Switzerland’s Vifor Pharma fell a further 5% after announcing Thursday that it would revise a key study after the pandemic affected the recruitment of participants, with data now expected in the second half of 2022.
U.S. stocks rose on Friday with the S&P 500 building on its rally to records, as investors bet that higher inflation will be temporary as the economy continues to recover from the pandemic. The broad equity benchmark climbed 0.3% to hit another closing record high of 4,280. Financials were the best-performing S&P 500 sector with a 1.3% gain. The Dow rose 237 points, or 0.7%, to 34,433, sitting less than 2% from its record. The Nasdaq erased earlier gains and closed 0.1% lower at 14,360 amid a rise in bond yields. The 10-year Treasury yield jumped 4 basis points to 1.5%. The S&P 500 rallied 2.7% for the week, notching its biggest weekly gain since early February. The Dow gained 3.4% this week for its best week since mid-March, while the Nasdaq advanced 2.4%. Friday’s rally came after a key inflation indicator that the Federal Reserve uses to set policy rose 3.4% in May, the fastest increase since the early 1990s, the Commerce Department reported Friday. The reading matched the expectation from economists polled by Dow Jones. The core index rose 0.5% for the month, which actually was below the 0.6% estimate. Bank shares jumped after the Federal Reserve announced the banking industry could easily withstand a severe recession. The Fed, in releasing the results of its annual stress test, said the 23 institutions in the 2021 exam remained “well above” minimum required capital levels during a hypothetical economic downturn. The decision cleared the way for the banks to raise dividends and buy back more stock, which was suspended during the pandemic. Wells Fargo climbed 2.6%, while Fifth Third and PNC all gained over 2%. JPMorgan and Bank of America both rose more than 1%. Nike’s stock surged 15.5%, helping to boost sentiment for the Dow. The company reported earnings and revenue that blew past Wall Street estimates. Digital sales also jumped 41% since last year and 147% from two years ago. On the flipside, FedEx dipped 3.6% despite beating on the top and bottom lines of its earnings. FedEx also gave a strong yearly outlook.
Stocks in Asia-Pacific were mixed in Monday trade. Meanwhile, official data showed that China’s industrial profits for May slowed. Mainland Chinese stocks were mixed, with the Shanghai composite fractionally lower while the Shenzhen component gained 0.92%. Data released Sunday by China’s National Bureau of Statistics showed profits at China’s industrial firms rose 36.4% in May as compared with a year earlier. That was a slowdown from the 57% year-on-year growth posted in April. Elsewhere, the Nikkei 225 in Japan slipped 0.28% while the Topix index sat below the flatline. South Korea’s Kospi dipped 0.1%. Australia stocks slipped, as the S&P/ASX 200 fell slightly. MSCI’s broadest index of Asia-Pacific shares outside Japan traded 0.11% lower. Trading in Hong Kong’s markets was set to resume at 1:30 p.m. HK/SIN on Monday after an earlier weather warning was lowered. Hong Kong Exchanges and Clearing announced earlier on Monday that the morning trading sessions of both the securities and derivatives markets, including Stock Connect trading, will be delayed due to a black rainstorm warning. Black rainstorm signals are issued as a warning of heavy rain that is likely to bring about flooding on the roads, leading to traffic congestion.
Gold steadied as investors weighed comments by a Federal Reserve official on monetary policy amid signs of easing inflation. Bullion is steadying below $1,800 an ounce as investors assess the outlook for an economic recovery and weigh the timing for when policy makers may start dialing back stimulus. Hedge fund managers cut net bullish gold bets to a seven-week low. Spot gold was little changed at $1,779 an ounce at 10:57 a.m. in Singapore, after earlier declining as much as 0.6%. Prices rose 0.4% on Friday. Silver and palladium steadied, while platinum fell.
Oil was steady near the highest since 2018 ahead of an OPEC+ meeting at which the alliance is forecast to announce supply increases that won’t be enough to keep pace with the global demand recovery. Futures in New York traded near $74 a barrel after rising 1% on Friday. The alliance, which gathers Thursday, will boost output by 550,000 barrels a day in August, according to a Bloomberg survey. However, that’s barely a quarter of the global deficit that OPEC+ itself anticipates during that month.
Copper prices fell on Monday as the dollar strengthened on worries over inflation in the United States that could lead to sooner-than-expected policy tightening. Three-month copper on the London Metal Exchange was down 0.6% at $9,354.50 a ton , while the most-traded August copper contract on the Shanghai Futures Exchange declined 0.9% to 68,280 yuan a ton. Nickel retreated from the highest close in almost four months as base metals broadly declined on expectations for a scaling back of stimulus that had aided the commodities rally. Nickel fell as much as 1.1% to $18,315 a metric ton on the London Metal Exchange before trading at $18,450 as of 10:42 a.m. in Shanghai. Prices surged 8% last week amid tightening supply on the LME and reports that Indonesia could cap investments in new nickel pig iron projects. Lead dropped 1%, while aluminum and copper also declined.
Iron ore in Singapore rose as investors weigh China’s slowing industrial profit growth and a call by the nation’s top steel industry body for stricter control of foreign ore traders. Iron ore futures in Singapore fell as much as 1.7% last week to $207.95 a ton before trading at $213.10 by 11:21 a.m. local time. Prices in Dalian rose 0.8%, while rebar was little changed and hot-rolled coil futures edged 0.9% higher.