Asian Shares Slip, Nikkei Breaks below 28,000 As Tech Stocks Track Nasdaq Slide

16/07/2021 Equities markets in Asia-pacific region headed lower on Friday as profit-taking in TSMC(Taiwanese chip giant) weighed on other tech firms, while a more dovish U.S. rates outlook kept bond yields near multi-month lows. Shares fluctuated in Japan and China after coming off lows, while the Hang Seng index marched higher on Beijing’s plan to exempt companies going public in Hong Kong from seeking cybersecurity regulatory approval -Tencent 0.70% firm. U.S. and European equity futures steadied Friday while Treasuries trimmed.

GOLD: the yellow metal was down but was boosted by U.S. Feds’ insistence that any inflation will be transitory and that the central bank would continue to support the economy. Gold futures inched down 0.19% to $1,825.90, almost gaining 1.2% so far this week.

OIL: Oil marginally up on Friday, but worsening outbreaks of COVID-19 involving the Delta variant in some countries and uncertainty over an OPEC+ deal to boost supply clouded the short-term outlook for the black liquid. Brent oil futures were steady at $73.47 and WTI futures inched up 0.08% to $71.71.

The local bourse was little changed on yesterday after days of unrest that damaged and/or destroyed businesses in Gauteng and KwaZulu-Natal. Preliminary estimates put the cost of the looting and damage to property at about R10bn. The JSE lost 0.53% to 67,538 points and the Top-40 0.51%. Retailers fell 1.84% – with Truworths 2.55% to R58.51, Mr Price 2.31% to R201.94 and TFG 1.44% to R156.19, and resources 1.24%. Sasol was the biggest loser in the resources index, also the worst performer overall, falling 7.75% to R214.50. The primary concern is the actual distribution of fuel to retail outlets, especially if the unrest persists. The government earlier banned the use of containers for petrol and diesel to thwart hoarding of fuel amid fears of shortages. The rand steady around the R14.50s level to the dollar, have given up 2.20% for the week. Yield on 10-year govt rand bonds fell 4.40 bps to 9.34 %. Top-40 futures +180points, IG.

NEWS:
• Gold Slips as Dollar Firms and Traders Assess Powell Comments
• Liberty Jumps on Standard Bank $721 Million Acquisition Plan
• WHO Warns South Africa to Brace For Covid-19 Surge After Riots
• South Africa to Boost Troops Fivefold to Help Quash Riots
• ImmunityBio Plans S. Africa Covid Health Worker Boost Trial
EQUITY PREVIEW:
• Stor-Age Waterfall Property Extensively Looted in Unrest
• Redefine Reports Five Properties Looted & Damaged
• PREVIEW RICHEMONT 1Q: Sales Recovery Seen on China and Cartier
• Santam Says Policies Don’t Cover Riots, Strikes, Public Disorder
• Tiger Brands Estimates Stock Loss in Excess of ZAR150m on Riots
• Pepco Group 3Q Preliminary Revenue EU1.04B
MEDIA SUMMARIES:
• ArcelorMittal South Africa Declares Force Majeure: Platts
• Financial Mail: Why SA’s most wanted have nothing to fear from the justice system
• Daily Maverick: South Africa is in a state and there is an emergency, but declaring a state of emergency is not the magic
• Daily Maverick: Under investigation: Twelve masterminds planned and executed insurrection on social media, then lost control
• Financial Mail: Anarchy in SA: behind the looting
• Business Day.za: PETER BRUCE: State of emergency is too much — unless your wife has run out of petrol
• News24: #UnrestSA: Taxi operators open fire on looters at mall in Vosloorus
GOVERNMENT:
• 7:30am: Acting Minister of Health Mmamoloko Kubayi will brief reporters on government efforts to contain Covid-19, including an update on the national vaccination program
• 10am: Parliament’s Portfolio Committee on Police receive a briefing from the minister of police and senior management of the South African Police Service on their response to the violence in Gauteng and KwaZulu-Natal provinces

EU/UK/US
The pan-European STOXX 600 index slipped 0.95%, with the IT and oil and gas sector falling 1.30% and 2.7% respectivley. Siemens Energy slid 11.1% after scrapping its margin target as its wind power division, Siemens Gamesa, was hit by higher-than-expected raw material and product ramp-up costs. Royal Dutch Shell and BP (oil majors) fell more than 2% as crude prices dropped on expectations of more supplies. Economically tsensitive stocks like banks, automakers, and travel were down between 0.3% and 1.6% as investors grew wary of rising COVID-19 cases across the continent. London’s FTSE100 retreated 1.12% by the end of trading, alongside the DAX sliding 1.01%. The BoE warned that with the economy reviving and inflation above the MPC’s 2% target, it may need to end its bond-buying programme in the coming months, rather than in December, and increase borrowing costs in 2022.

The S&P 500 ended the day below the watermark, giving up 0.33%,after Fed. Chair reiterated the central bank will continue to provide stimulus even as inflation continues to rise rapidly, raising concerns about the state of the economic recovery. The Nasdaq dropped 0.70% pulled down by Apple, Amazon and other big tech companies .Bank earnings continued with Morgan Stanley’s results with earnings beating most estimates except its fixed-income trading revenue of $1.7 billion, which came in below analyst expectations for $1.9 billion. The bank’s shares closed up 0.2% after a volatile session. U.S futures steady, marginally in the green

ASIA
MSCI’s broadest index of Asia-Pacific shares outside Japan lost 0.37%, weighed by a 1.21% fall in Taiwanese shares after TSMC’s earnings on Thursday. New COVID-19 infections leapt to 1,308 cases in Tokyo on Thursday, the highest since January, a week before the city hosts the Olympics, which could potentially spark a renewed surge in infections amid the influx of foreign athletes and officials. The Nikkei225 is down 0.47%, alongside Shanghai Composite dropping 0.17%, while the blue-chip CSI300 index was down 0.31% – consumer staples sector was down 1.13%, and the healthcare sub-index was down 0.30%. Australia’s S&P/ASX200 flat 0.07%.