Asian Markets Muted, Dollar Steady Ahead of U.S. Inflation Data

14/09/2021 Equities markets were mixed in Asia on Tuesday morning and the dollar held steady, with traders waiting in anticipation on U.S inflation data coming out this afternoon, 14H30 local time, for more clues on when the Federal Reserve will taper stimulus. China’s tightening grip on its technology companies and a widening liquidity crisis for the country’s most indebted developer, China Evergrande Group, continued to keep investors on edge in early trade. MSCI’s broadest index of Asia-Pacific shares ex. Japan edged up 0.19%. Japan’s Nikkei outperformed regional peers, while China and Hong Kong wavered sideways. Australia remained steady. Both U.S. and European contracts remained marginally above the waterline, Treasury yields and the dollar were steady.

Oil extended gains on Tuesday, and remained near a six-week high. Markets are bracing for another tropical storm, Nicholas, that could impact production in Texas as the U.S. Gulf Coast continues to recover from Hurricane Ida that hit the region at the end of August. Brent oil futures was up 44cents, 0.60%, to $73.95 this morning, alongside WTI futures gaining 0.65% to $70.90.

Gold steadied ahead of U.S. inflation data that could hint at when the U.S. Federal Reserve could begin asset tapering. Gold futures inched down 0.10% to $1,792.11. Traders now await U.S.CPI data, due later in the day. If the number is higher than expected, expectations for when the Fed could start asset tapering could shift to November from December, according to analysts.

Aluminium extended its retreat after hitting $3,000 a ton in London for the first time since 2008 on signs investors are taking profits. The metal fell for a second day after reaching a 13-year intraday high on Monday, while it also dropped in Shanghai.

Here are some events to watch this week:
• U.S. consumer-price index, Tuesday
• Apple product-launch event, Tuesday
• China retail sales, property prices, industrial production, Wednesday
• Quadruple witching day for U.S. markets, Friday

Local Market
On Monday the local bourse firmed 0.55% to 64,652 points at the close, boosted by miners and Sasol, and the Top-40 gained by the same percentage margin too. Sasol leaped 8.46%, to close at R240.50. The mining index rose 3.03%, resources 1.77%, banks and financials both added 1.18%. Anglo American Platinum led the gains in the precious metals sector, up 5.14% to R1,445.58. Northam Platinum 4.08% to R182.89, Impala Platinum 3.33% to R183.52 and Royal Bafokeng 2.74% to R81.06. Naspers and Prosus both table extended losses on Monday, pulling back 0.93% and 2.59% respectively, after reports that Chinese regulators are looking to split up Alipay – the payments app owned Ant Group. Rand marginally down 0.10% to R14.1550/$. Yield on 10-year govt rand bonds rose 4.20 bps to 9.24 %. Tencent notching up 0.17% in Hong Kong on Tuesday morning, Top-40 contracts firm +140 points on IG markets.

Mining output data will be published for July and June after some delays. Statistics South Africa will report the figures at 11.30 a.m.

NEWS:
• Steinhoff to Sell Down Pepkor Stake to Help Pay Creditors
• BMW, JPMorgan Urge U.K. to Ease Covid Limits on Southern Africa
• Foreigners Are Dumping South African Debt as Never Before: Chart
• Ramaphosa Foe Loses Bid to Reverse Suspension From Ruling Party
EQUITY PREVIEW:
• South African Stocks Are at Attractive Valuations, Matrix Says
• Naspers, Prosus Fall After Latest China Regulatory Moves
MEDIA SUMMARIES:
• Daily Maverick: Politics versus nationwide thirst: Water supply problems could sink South Africa
• Business Day.za: NEWS ANALYSIS: M-Pesa dominates African fintech as it hits 50-million users
• BBC: British American Tobacco negotiated bribe for Mugabe, new evidence suggests
ECONOMIC DATA:
• 11:30am: July Mining Production MoM
• 11:30am: July Mining Production YoY
• 11:30am: July Gold Production YoY
• 11:30am: July Platinum Production YoY
GOVERNMENT:
• South African Chamber of Commerce holds briefing in KwaZulu-Natal, scene of deadly riots in July
• South African National Council of Provinces lawmakers to receive a ministerial briefing on interventions to revive the economy following recent unrest.

EU/UK/US
Equities markets in the EU zone snapped 4-day losing streak as oil, banks and utility shares gained after a top European Central Bank official said recent gains in inflation did not yet pose a risk. ECB governing council member, Isabel Schnabel, took aim at the doomsayers in Germany on the outlook for inflation. The pan-European Stoxx 600 index was up 0.26%, while Germany’s Dax added 0.59% and FTSE100 advanced 0.56%. Investor sentiment was also boosted by an upbeat view on the outlook for stocks heading into year-end out of strategists at JP Morgan. German online pet supplies’ retailer Zooplus jumped after Hellman & Friedman raised its takeover offer to £3.29bn from an initial offer of £3bn.

Wall Street stocks were mostly in the green after the opening bell on Monday as the blue-chip Dow and the S&P 500 looked set to bounce back from five consecutive days of losses. At the close, the Dow advanced 0.76%, alongside the S&P500 adding 0.23% on the day, while the tech-heavy Nasdaq slid 0.07%. U.S. inflation data on Tuesday is expected to show core consumer prices rose 0.3% in August. Prices were up 0.3% the previous month and 0.9% in June. Economists expect annual inflation to ease slightly to 4.2% from 4.3% in July. The data comes ahead of a key meeting by the Federal Reserve on Sept 21-22. Both the Dow and S&P500 futures are 0.21% in the green, with Nasdaq tracking gains of peers at 0.15%.

ASIA
Japan’s Nikkei hit a more than 30-year high on Tuesday, with cyclical stocks rising the most, tracking overnight gains in major U.S. indexes. Progress in domestic vaccine rollouts raised hopes for an economic reopening, boosting sentiments.
The Nikkei225 touched 30,795.78, its intraday high since August 1990. Currently, the benchmark is steady 0.47% at 30,590 levels. China Evergrande Group’s struggles to quickly sell off assets and avert defaulting on its 1.97 trillion yuan ($305.3 billion) in liabilities is raising the risk of contagion for other privately-owned developers. Both CSI300 and Hang Seng are wobbly at 0.29% and 0.05%. Aussie’s ASX 200 steadied 0.13%, dragged by technology stocks, although the losses were limited by domestic energy stocks that rose on firmer oil prices.