Asia Stocks Dip Amid Virus Spread and China Clampdown / Dow and S&P 500 closed at record highs

13/08/2021 Most Asian shares slipped Friday as the spread of the delta Covid-19 variant and China’s regulatory curbs restrained sentiment despite another record high close on Wall Street. The technology sector led losses on a slide in Chinese Internet giants and a retreat in chipmakers that hurt South Korean equities. U.S. and European equity futures were steady after the S&P 500 hit a fresh peak and the tech-heavy Nasdaq 100 rose. Airbnb Inc. slid in extended trading on a tough outlook due to the virus, while a surge in streaming demand boosted Walt Disney Co. U.S. Treasury 10-year yields were near a one-month high following a tepid 30-year auction and data highlighting price pressures and a recovery in the labor market. A gauge of the dollar held an advance. Asian stocks are continuing to struggle as vaccinations lag and the delta variant hampers the region’s economic reopening. In contrast, Europe and the U.S. have pushed ahead with inoculations and stocks there are hitting records. Oil dipped as traders grappled with the impact of the delta variant on demand. Tencent trades 3.6% lower in HK. The Rand has weakened to around 14.80 vs the USD, with the FTSE JSE Top 40 futures indicating a lower start down 120 points or 0.0.19%.
Yesterday the FTSE/JSE Africa All-Share Index closed down 0.3% to 69,401, with the precious metal and mining index weighing the most closing down 2.3%. Anglogold and Goldfields suffered losses of over 4% each. Banks were also lower on a weaker Rand, with MTN one of the few winners after reporting results and saying that it is close to reach a Tower Deal. The Rand was down 0.8% to 14.78 per US$, with the Yield on 10-year govt rand bonds that fell 3.20 bps to 9.30 %.
The National Treasury will offer 1.2 billion rand of inflation-linked bonds at its weekly auction.

  • Gold Slips as Dollar Firms After U.S. Inflation, Labor Reports
  • MTN Closes In on Tower Deal as Wider Breakup Continues Apace
  • Eskom’s Medupi Blast Could Cost 2b Rand, Take Two Years: Fin24
  • Discovery Appoints Monhla Hlahla as Non-Executive Director
  • Lighthouse Capital Offering Prices at 8.1 Rand/Share
  • MTN and Sanlam Invest $100 Million in Africa Insurance Venture
  • Nedbank Offering by Holder Prices at 174.5 Rand/Share: Terms
  • Northam’s Zondereinde Mine Concludes Five-Year Wage Agreement
  • Iron Ore Miners to Ship 5.2% More in 3Q Than 2Q: Bernstein
  • Exxaro Interim Dividend 20.77 Rand/Share
  • MTN 1H Net Income 2.67B Rand Vs. 12.12B Rand Y/y
  • Business Day.za: Cashbuild’s plans to buy Pepkor’s hardware subsidiary fall apart

EARNINGS:

  • Thungela Resources Ltd. (TGA SJ), 1H

GOVERNMENT:

  • 7:30am: Health Minister Joe Phaahla briefs reporters on the fight against Covid-19 and the national vaccination program

BOND SALES/PURCHASES:

  • 11am: South Africa to Sell 2.25% 2038 Linkers
  • 11am: South Africa to Sell 1.875% 2029 Linkers
  • 11am: South Africa to Sell 2.5% 2050 Linkers
  • 12pm: South Africa to Sell 3.8 Billion Rand of 273-day Bills
  • 12pm: South Africa to Sell 2.7 Billion Rand of 182-day Bills
  • 12pm: South Africa to Sell 4.2 Billion Rand of 364-day Bills
  • 12pm: South Africa to Sell 1 Billion Rand of 91-day Bills

CORPORATE EVENTS:

  • Earnings Calls: TGA SJ
    EU/UK
    European stocks closed slightly higher on Thursday, as lingering concerns over global Covid-19 cases overshadowed gains on Wall Street after the latest U.S. inflation reading. The pan-European Stoxx 600 provisionally closed up 0.1%, with basic resources sliding 1.9% to lead losses while autos stocks gained 1.2%. Most sectors and major bourses were in positive territory. On the data front, U.K. gross domestic product grew by a stronger-than-expected 1% in June, but remains 2.2% below its pre-pandemic level. A preliminary estimate of second-quarter GDP showed growth of 22.2% from the same period last year, when nationwide lockdown measures sent the British economy into freefall. Earnings came from Zurich Insurance, Delivery Hero and RWE on Thursday. At the top of the Stoxx 600, British food delivery company Deliveroo added another 8.9%, continuing to climb after German rival Delivery Hero’s stake in the company was revealed earlier this week. Dutch insurer Aegon climbed 7.3% after beating second-quarter profit expectations At the bottom of the index, Delivery Hero dropped 7.6% after reporting results. London-listed shares of Anglo-Australian miner Rio Tinto slid 5.5% as they traded ex-dividend.
    US
    U.S. stocks edged higher on Thursday, pushing both the Dow Jones Industrial Average and S&P 500 to fresh records during an otherwise tame session. The Dow rose 14.88 points to 35,499.85, a record close for the blue-chip index. The S&P 500 climbed 0.3% to 4,460.83, also a record. The Nasdaq Composite outperformed with a gain of 0.3% to end the day at 14,816.26. Among the S&P sectors, health care and tech outperformed with gains of about 0.8% and 0.6%, respectively, while energy, industrials and materials stocks lagged. Salesforce and Apple were the best-performing stocks in the Dow, while Home Depot and Visa slipped. The Labor Department reported Thursday morning that initial jobless claims declined slightly last week as the U.S. labor market continues its recovery from last year’s recession. There were 375,000 claims last week, matching estimates. The prior reading came in at 385,000 claims, but was revised to 387,000. The prices U.S. manufacturers and other businesses pay for labor, raw materials and other goods rose again in July. The government said its producer price index, excluding volatile food, trade services and energy components, rose 0.9% last month versus a forecast for a 0.5% gain.
    ASIA
    South Korean stocks led losses among the Asia-Pacific markets in Friday trade, with shares of firms related to conglomerate Samsung falling after the firm’s heir was released from prison. In Friday trade, shares of industry heavyweight Samsung Electronics plunged 3.38% while Samsung C&T dropped 1.11%. Samsung Life Insurance fell around 1.2% and Samsung SDS declined 1.68%. Those losses came after Samsung Electronics Vice Chairman Jay Y. Lee was released from prison on Friday. South Korea’s justice ministry announced earlier this week that he had qualified for parole. Meanwhile, shares of chipmaker SK Hynix fell 0.5%, with the semiconductor sector under pressure after Morgan Stanley warned of a slowdown in the space ahead. The broader Kospi in South Korea was down by 1.4%. Elsewhere, Hong Kong’s Hang Seng index slipped 0.7%. Mainland Chinese stocks were also lower as the Shanghai composite dipped 0.25% while the Shenzhen component declined 0.575%. In Japan, the Nikkei 225 was flat while the Topix index traded 0.22% higher. Over in Australia, the S&P/ASX 200 edged 0.48% higher as investors watched the coronavirus situation, with the country’s capital Canberra entering a week-long lockdown from Thursday after a Covid-19 case was identified. MSCI’s broadest index of Asia-Pacific shares outside Japan shed 0.71%. The Japanese yen traded at 110.41 per dollar, weaker than levels below 110.20 seen against the greenback earlier this week. The Australian dollar changed hands at $0.7342, off levels above $0.736 seen earlier in the trading week.
    COMMODITIES
    Gold headed for a second straight weekly loss after the Federal Reserve moved closer to reining in its massive stimulus. The durability of the global economic recovery has dimmed the appeal of the haven asset in recent weeks as a series of Fed officials signaled they’re ready to discuss softening ultra- loose monetary policy. Spot bullion rose 0.2% to $1,756.53 an ounce as of 10:43 a.m. in Singapore on Friday. It’s down 0.4% this week and 3.2% so far in August. Silver advanced 0.6% on Friday, while platinum and palladium edged lower.
    Oil prices fell for a second day on Friday after the International Energy Agency warned that demand growth for crude and its products had slowed sharply as surging COVID-19 cases worldwide forced governments to revive movement restrictions. Brent crude was down 49 cents, or 0.7%, at $70.82 a barrel, after dropping 13 cents in the previous session. U.S. crude was off by 53 cents, or 0.8%, at $68.56 a barrel, having fallen 0.2% on Thursday. The benchmarks are still heading for a slight gain this week.
    Iron ore extended its decline as China’s steel industry vowed to enforce efforts to cut output this year. The government will work closely with the industry to develop plans for staggered steel production cuts over winter, Shanghai Securities News reported, citing Ministry of Ecology and Environment deputy director Wu Xianfeng. Major producers such as Jiangsu and Shandong have already made arrangements to reduce output in the second half, he said. Iron ore has lost more than a quarter of its value in less than a month, and futures are on track for a fourth weekly decline, as China ramps up efforts to rein in steel production to curb emissions. Iron ore in Singapore fell 0.4% to $158.60 a ton, down more than 5% this week. Futures in China fell 0.4% and are on track for the lowest close since November.
    Nickel headed for its biggest weekly gain in a month as record electric vehicle sales in China bolstered the demand outlook, while supply remains constrained by the coronavirus. Chinese EV sales more than doubled year-on-year to 271,000 in July, according to data from the China Association of Automobile Manufacturers released this week. That came after a report late last month showed stainless steel output in Asia’s largest economy surged 21% to 16.2 million metric tons in the first half from a year earlier. Nickel is a key ingredient in the alloy and is also used to make EV batteries. Nickel declined 0.6% on Friday to $19,565 a ton on the London Metal Exchange. It’s up 1.8% this week. Copper climbed 0.5% to $9,512 a ton despite BHP Group workers in Chile reaching a wage deal to avert a strike at the world’s largest copper mine, while other base metals were mixed.