Stocks, Oil Sink on Growth Worries; Dollar Gains

19/08/2021 Asian stocks fell to the lowest this year, crude oil sank and the dollar rallied on a weakening global growth outlook and the prospect of reduced Federal Reserve stimulus.
MSCI Inc.’s gauge of Asia-Pacific shares fell more than 1%, with Hong Kong equities leading the slide as Chinese technology stocks struggled, including a plunge in Alibaba Group Holding Ltd. to a record low. Tencent is 1.35% lower after reporting number yesterday after their close which were in-line.

Locally the day got off to a late start as technical issues, trading was delayed by five hours due to a system snarl-up sparked by record turnover on Tuesday in the wake of the Naspers-Prosus share swap. The JSE said in a statement that it experienced significant delays in processing “large corporate actions” on some of its systems after turnover reached R145bn on Tuesday, more than seven times the daily average trading volume. Volumes were solid once again despite the late start with R 29.7 bln trading, miners dragged the all share lower, with industrial miners slumping 6.74% and resources shedding 5.33% on the back of lower commodity prices. Naspers and Prosus traded up 4.11 and 2.52 percent respectively. OMU led the gainers up 4.16 percent after issueing a trading statement saying they see 1H Recovery in sales and profit but raises Covid-19 Provision. We in for another tough day as Commodities trade lower, Asia is lower, Tencent is lower despite numbers and US Futures trade lower. IG Markets are 805 points lower. One notable ex-div today, AGL special cash div of 80 US cents.
• STANDARD BANK 1H ADJ EPS 7.214 RAND VS. 4.74 RAND Y/Y. Standard Bank interim div R 3.60.
• Gold Fields 1H Net Income $378.4M Vs. $155.5M Y/y, Declares Dividend of ZAR2.10
ECONOMIC DATA:
• 20: June Mining Production MoM, est. 1.5%, prior -3.5%.
• 20: June Mining Production YoY, est. 21.1%, prior 21.9%.
• 20: June Gold Production YoY, prior 44.5%.
• 20: June Platinum Production YoY, prior 27.0%
European stocks closed slightly higher on Wednesday as investors monitored inflation data and looked ahead to minutes from the Federal Reserve’s latest meeting. The pan-European Stoxx 600 index provisionally ended the session up around 0.1%. Utilities and travel and leisure shares led the gains, both climbing over 1%, while mining stocks were the worst performers. Market participants were closely monitoring economic data. U.K. inflation data for July showed an unexpected dip to 2% on Wednesday morning. Economists noted that it was likely a blip with data projected to keep trending higher in the coming months.
In the US overnight, the 30-Dow stocks dropped 380 points, falling for a second day, while the S&P 500 slid more than 1% and the Nasdaq was 0.89 percent lower. Markets weren’t helped by the FOMC minutes where central bankers at their July meeting made plans to pull back the pace of their monthly bond purchases likely before the end of 2021. However, committee members broadly agreed that employment has not met the “substantial further progress” benchmark the Fed has set before it would consider raising rates. Investors will monitor new jobless claims data due later today. Economists polled by Dow Jones expect a total of 365,000 in the week ended Aug. 14, slightly below the total of 375,000 in the prior week.
Shares in Asia-Pacific fell today, with Chinese tech stocks slipping again as regulatory fears continue to weigh on investor sentiment. Shares of Alibaba in Hong Kong fell 3.85%, after earlier dropping to as low as 164.20 Hong Kong dollars per share, a record low. Other Hong Kong-listed Chinese tech giants also saw losses, with Tencent slipping 1.35% while Meituan dropped 5.22%. The Hang Seng Tech index slipped 1.37%. In Australia, the S&P/ASX 200 fell 0.47%. Australia’s unemployment rate declined to 4.6% in July, against June’s reading of 4.9%. Mining stocks in Oz are also under pressure as Iron Ore trades lower again, BHP down another 6.13% and RIO down 5.85%. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.44%.
Crude prices extended their losses into a sixth day, hovering near 3-month lows, hurt by growing fears over slower fuel demand amid a spike in Covid-19 cases worldwide while an unexpected rise in U.S. gasoline inventories added to pressure. Brent – 1.55% $ 67.14, WTI – 2.02% $ 64.14.
Gold prices are lower as the dollar strengthened after U.S. Federal Reserve’s policy meeting minutes showed that its officials were largely on board to start easing bond purchases this year. Gold – 0.52% $ 1778, Platinum – 1.37% $ 985, Palladium – 0.35% $ 2418.