28/09/2021 Asia stocks are mixed as Treasury yields climbed with investors pricing in the start of Federal Reserve tapering and elevated energy prices stoking inflation concerns.
MSCI Inc.’s index of Asia Pacific stocks snapped a three-day advance. Japan and Australia slid, China and Hong Kong advanced, led by property stocks, after China’s central bank said it will work to safeguard the “healthy” development of the property market amid the China Evergrande Group crisis. Oil built on a rally as fears of a global energy crunch intensified. Brent hit $80 a barrel for the first time since October 2018. WTI crude climbed above $76 a barrel. Goldman Sachs Group Inc. said Brent could hit $90 by year-end as the market is in a bigger deficit than many realize.
Locally the JSE All Share closed up 0.23 percent, industrial metals & mining, resources and listed property stocks helped the local bourse edge higher with platinum names being the big losers, SSW and IMP closed down 5.05 and 4.60 percent respectively. We should see the local market open firmer this morning, Tencent is up 1.94%, US Futures mixed with the Dow and S&P up and Nasdaq a little softer and IG Top 40 index up 109 points.
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11:30am: 2Q Non-Farm Payrolls YoY, est. -1.0%, prior -5.4%
11:30am: 2Q Non-Farm Payrolls QoQ, est. 0.1%, prior -0.1%
European stocks are expected to open tentatively higher as markets in the region continue to monitor the latest developments after Germany’s inconclusive federal election. Earnings come from Lego later, while data releases include German consumer sentiment data and French consumer confidence figures. Other events in focus include ECB President Christine Lagarde’s speech at the ECB Forum on Central Banking at 1 p.m. London time and OPEC’s World Oil Outlook which is due early this afternoon. FTSE + 0.175, CAC + 0.19%, DAX + 0.27%
Overnight in the US, the Dow gained 71 points, the small-cap Russell 2000 rallied 1.5%, however the S&P 500 fell 0.3% and the Nasdaq was the relative underperformer, dipping 0.5%, as the drop in bond prices pressured growth names like Microsoft and Amazon. Wall Street is also looking ahead to Thursday, when the House is expected to vote on the $1 trillion bipartisan infrastructure bill already approved by the Senate. Thursday also marks the final day of trading of September and the third quarter. The Dow is down 1.4% for the month, and the S&P 500 is off by 1.8%. The Nasdaq Composite has lost 1.9% in September.
Stocks in Asia-Pacific were mixed this morning, as various firms downgraded China’s GDP forecasts. Goldman Sachs slashed its China GDP growth expectations to 7.8%, down from the 8.2% previously forecast. Despite the GDP downgrades the Hang Seng is up 1.40% and the Shanghai Comp is up 0.55%. In Japan, the Nikkei fell 0.4% while the Topix index shed 0.53%. The S&P/ASX 200 in Australia dipped 1.26% as the mining index shed 2.40% with RIO and BHP down 2.49 and 2.00 percent respectively. MSCI’s broadest index of Asia-Pacific shares outside Japan traded 0.07% higher.
Oil markets rise again this morning, reversing earlier losses and extending their rally into a sixth session, amid continued concerns over tight supply at a time when demand is picking up with the easing of COVID-19 pandemic restrictions. Brent trades at a three year high just above $ 80 a barrel. Goldman Sachs raised their year-end forecast for Brent to $90 per barrel. Global supplies have tightened due to the fast recovery of fuel demand from the outbreak of the Delta variant of the coronavirus and Hurricane Ida’s hit to U.S. production. Brent + 0.74% $ 80.14, WTI + 0.85% $ 76.09.
Gold is flat despite a firmer dollar and rising US yields, Gold Spot is up 0.03% at $ 1750.44, Platinum + 0.42% $ 988 and Palladium + 0.06% at $ 1970.