Asia Stocks, U.S. Futures Dip on Delta Strain Concerns

29/06/2021 Asian stocks dipped this morning amid concerns a more infectious Covid-19 strain will derail an economic recovery. Treasuries and the dollar were steady after gains. An MSCI index of Asia-Pacific shares was on track for its first decline in six days as countries in the region are struggling to contain the highly transmissible Delta variant of the virus. U.S. futures lower after technology stocks led U.S. benchmarks to fresh records Monday. New limits on travel from Britain, which is seeing a spike in cases, dragged on cruise operators and airlines. The Treasury yield curve flattened amid month-end index rebalancing and the break in auctions until July 12, reducing supply. Oil extended a decline with the market expecting OPEC+ producers to increase supply at an upcoming meeting. Bitcoin was steady around mid-$34,000. Tencent trades 1.01% lower in HK. The JSE Top 40 futures are indicating a slightly lower start down 135 points or 0.23%, 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 down 0.6% to 65,809.35, mostly weighed down by Banks, Financials and retailers, with all 3 sectors shedding more than 2% on the day. Sasol lost a hefty 3%, with travel and leisure stocks also under pressure after the government imposed stricter lockdown rules for 14 days. Naspers and Prosus were amongst a few positives, gaining 1.7% and 1.2% respectively as they tracked higher US tech stocks. The Rand was down 0.66% to 14.23 per US$, with the Yield on 10-year govt rand bonds that fell 1.90 bps to 9.32%
    South African Constitutional Court to rule on whether former President Jacob Zuma is in contempt of court for walking out of a judicial inquiry into graft.
  • South African Central Banker Sees Economy More Lockdown-Proof
  • U.K. Case Surge; U.S. Tops Covid Best-Places List: Virus Update
  • Gold Steadies as Traders Weigh Travel Limits, Dollar Strength
  • Virus Outbreaks in Sydney, South Africa Cool Hot Currency Trades
  • South African Consumer Mood Falls on End of Welfare Program
  • South African Stock Outflows Hit Longest Run Since 2019
  • China’s Coal Markets Tumble as Government Vows More Imports
  • Stenprop Shares Gain in Johannesburg After Call Option Exercised
  • Glencore Snaps Up More Coal, Helping Its Rivals Retreat
  • Capitec’s 1Q Common Equity Tier 1 Capital Adequacy Ratio 36.4%
  • S. African Brewer, Retailers Fall After Ban on Alcohol Sales


  • 11:30am: 1Q Non-Farm Payrolls YoY, prior -5.8%
  • 11:30am: 1Q Non-Farm Payrolls QoQ, est. -0.1%, prior 0.8%


  • Government holds briefing on new lockdown restrictions


  • South African Reserve Bank Quarterly Bulletin (1Q)


  • 11am: South Africa to Sell 1.3 Billion Rand of 8.5% 2037 Bonds
  • 11am: South Africa to Sell 1.3 Billion Rand of 8.25% 2032 Bonds
  • 11am: South Africa to Sell 1.3 Billion Rand of 9% 2040 Bonds


  • Annual General Meetings: L4L SJ
    Europe markets close lower as Covid cases batter travel stocks; Burberry down 9% on CEO exit. The pan-European Stoxx 600 closed down by 0.6% provisionally, with travel and leisure stocks tanking 4.3% to lead the losses on news that Portugal has imposed a quarantine on unvaccinated arrivals from the U.K. New Health Secretary Sajid Javid will update lawmakers on when the U.K. can expect to ease Covid-19 measures further. Covid restrictions are currently due to end on July 19, the date already having been extended due to the spread of the delta variant. In corporate news, Daimler is on track to spin off its truck unit by the end of the year, the stock was down 2.3%. Meanwhile, Dutch insurer NN Group announced Sunday that it had offered to acquire some of MetLife’s businesses in Europe, though the size of the offer and the specific businesses targeted remain undisclosed. NN Group’s shares finished flat. In terms of individual share price movement, Finnish telecoms giant Nokia climbed 5.8% to lead the Stoxx 600 after Goldman Sachs upgraded the stock. At the bottom of the European blue chip index, British fashion brand Burberry slumped 8.7% after announcing that CEO Marco Gobbetti will depart to take the top job at Italian luxury goods company Ferragamo.
    The U.S. stock market set more record highs on Monday, boosted by a court win for Facebook and broad strength in tech stocks. The S&P 500 ticked up 0.23% to 4,290 for its third-straight record close, while the Nasdaq rose 0.98% to an all-time closing high of 14,500. The Dow Jones Industrial Average, however, slid 150 points to 34,283 as energy and transport stocks came under pressure. Tech stocks were in the driver’s seat on Monday, with shares of Apple and Salesforce adding more than 1%. Facebook jumped more than 4% after a U.S. federal court dismissed an antitrust case against the company from the Federal Trade Commission and closed with a market cap above $1 trillion. Semiconductor stocks were a bright spot on Monday, with Nvidia rising 5% and Broadcom climbing more than 2%. Aerospace giant Boeing weighed on the Dow, with shares falling more than 3% after regulators told the company it is not likely to receive certification for its long-range aircraft until mid-to-late 2023. CEO Dave Calhoun earlier this month said it expected certification in the fourth-quarter of 2023. “At the sector level, the rates math is characteristically resulting in outperformance of high dividend yield (Utilities, Staples) stocks while Financials are lagging. Energy is the worst performing sector as the broader reflation trade is put on hold,” Goldman Sachs’ Chris Hussey said in a note to clients.
    Mainland Chinese and Japanese stocks fall nearly 1% as Asia-Pacific markets slip. Shares in Asia-Pacific fell in Tuesday trade despite gains overnight on Wall Street as the S&P 500 and Nasdaq Composite closed at record highs. Mainland Chinese stocks were down by the afternoon. The Shanghai composite edged 0.95% lower, while the Shenzhen component dropped 0.97%. Hong Kong’s Hang Seng index declined 0.77%. The Nikkei 225 fell 0.89% while the Topix index shed 0.95%. South Korea’s Kospi also declined 0.52%. In Australia, the S&P/ASX 200 dipped 0.31%. MSCI’s broadest index of Asia-Pacific shares outside Japan traded 0.55% lower. The Japanese yen traded at 110.53 per dollar, stronger than levels above 110.8 seen yesterday against the greenback. The Australian dollar changed hands at $0.7556, down from levels around 0.758 seen earlier this week.
    Gold edged lower with the dollar strengthening and bond yields retreating, while investors weighed fresh travel restrictions in Europe and a Federal Reserve official’s comments on a possible 2022 U.S. interest- rate hike. Spot gold slid 0.2% to $1,777 an ounce at 3:55 p.m. in New York, after earlier declining as much as 0.6%. Futures for August delivery on the Comex rose 0.2% to settle at $1,780.70. Platinum also edged lower, while silver and palladium rose.
    Oil extended losses as a coronavirus resurgence raised concerns about demand ahead of an OPEC+ meeting this week that could see the alliance boost some halted output. Futures in New York dropped 0.4% after falling back below $73 a barrel on Monday.
    Copper was steady in London with investors weighing a supportive long-term fundamental outlook against short-term risks to demand as major economies exit the pandemic and stimulus ebbs. In the long term, copper bulls say prices could outperform broader commodities markets as usage picks up in electric vehicles and renewable-energy infrastructure over the next few years, and mine supply struggles to respond. Copper traded little changed at $9,400 a ton as of 10:43 a.m. on the London Metal Exchange, holding last week’s 2.9% gain. Most other metals were flat, while nickel fell 0.6%.
    Iron ore declined as investors weighed the impacts of Chinese steel output restrictions before the nation’s centenary celebration of the communist party. Some of the steel and coal sectors have restricted production for one to two weeks as the celebration of the Chinese Communist Party nears. Contracts in Dalian fell 1.6% to 1,176 yuan ($182) a ton at 11:05 am local time. Futures in Singapore declined 2.1%. Rebar and hot-rolled coil futures were little changed in Shanghai.