Asian Equities Markets Slip, Contrasts Wall Street’s Rebound

06/10/2021 Stock Markets in Asia slumped on Wednesday as oil hits multi-year highs and shares quick to react to any hint of bad news such as a rate hike by New Zealand’s central bank. MSCI’s broadest index of Asia-Pacific ex. Japan fell 1.60% in early trade, for the fourth straight session. Japan, Hong Kong and Australia retreated, going against Wall Street last night recovery fuelled by bargain-hunting. New Zealand’s central bank on Wednesday raised interest rates by 25 basis points. U.S. Treasury yields extended advances amid a surge in oil prices that threatens to stoke inflationary pressures. Both European U.S. contracts declined. Markets are awaiting U.S. jobs data this coming Friday for clues about the Fed policy outlook.

Bitcoin rose on Tuesday, passing the $50,000 mark for the first time in four weeks on mounting institutional interest.
Gold held a decline, weighed down by elevated concerns of imminent inflationary pressures. The bullion was down 0.38% to $1,753.61 at the writing. The dollar, which usually moves inversely to gold, edged up on Wednesday and remained near its highs for 2021, while the benchmark U.S. 10-year Treasury yield ticked upwards.
Oil prices rose for a fifth day on Wednesday to their highest since 2014, seven year high, amid global concerns about energy supply on signs of tightness in crude, natural gas and coal markets. Brent crude was last seen up 0.33% to $82.82, while Texas’s light-sweet, WTI, gained 0.35% to $79.20. Oil prices have surged more than 50% this year, adding to inflationary pressures that crude-consuming nations are concerned will derail recovery from the COVID-19 pandemic.

Local:
On Tuesday, the local bourse tracked firmer global markets; with investors switching/rotating into energy stocks as higher oil prices are set to persist. The All-share rose 0.65% to 64,542 points and the Top-40 bagged 0.60%. Retailers added 2.08% and industrials 1.36%.Truworths added 3.58% to R55.22, Mr Price 2.81% to R201.50. Exxaro sky-rocketed 10.73% to R182.50. Sibanye and Goldfields lost 2.64 and 2.34% respectively as gold, platinum and palladium were all down. EX DIVS: FVT SJ 11.473c, MST SJ 90c, TEX SJ 37.47c. The local currency steadied around R15.08/$, with Top-40 futures -345 points on IG.

South African Reserve Bank Governor Lesetja Kganyago speaks at The Centre for Development and Enterprise’s discussion on the economy, jobs and growth. National Union of Metalworkers of South Africa strike continues.
WHAT TO WATCH:
• South Africa SARB to Take Action if Inflation Risks Materialize
• South African Steel Workers Strike as Pay Talks Deadlock
• Europe’s Gas and Power Surge to Records as Supply Concerns Flare
• Absa, Sanlam Merge Money Managers, Creating $67 Billion Firm
• Gold Snaps Three-Day Advance as Yields and Dollar Push Higher
• Anglo Names First Female CEO at Top African Iron Ore Miner
• Facebook Blames Huge Outage on Network Configuration Change
• Kumba Iron Ore Appoints Nompumelelo Zikalala as CEO

EQUITY PREVIEW:
• Avior Keeps S. Africa’s Northam at Outperform on Growth Outlook
• MTN Uganda IPO to Raise Double Capital Market Size:Rtrs
• Pepkor Sees Full-Year Earnings per Share Swinging to Profit y/y
• Mr Price Raised to Buy at SBG Securities; PT 230 rand
• Exxaro, Thungela Soar as Citi Raises Targets to Street Highs
• Capitec Falls as Citi Downgrades ‘Well Run, But Expensive’ Bank
• Capitec Bank Cut to Neutral at Citi
• Absa Exchanging Investment Unit for 17.5% in Sanlam Division
• Kumba Iron Ore Appoints Nompumelelo Zikalala as CEO
• Foreign Investors Net Sellers of South African Bonds

EU/UK/US
European stocks rallied on Tuesday as rising bank stocks and an encouraging earnings update from German chipmaker Infineon calmed nerves following a tech-fuelled selloff on Wall Street. The pan-European Stoxx 600 index gained 1.17%, alongside the Germany’s DAX up 1.05%. Both the London’s FTSE100 and Paris’ CAC-40 advanced 0.94% and 1.52% at the close. Infineon Technologies was up 5.1% after it confirmed its 2021 revenue and said it expects results to rise further next year as demand for power chips for cars, datacentres and renewable power generation soars. British baker and fast-food chain Greggs climbed 4.1% after it raised its full-year profit outlook despite staffing and supply chain disruption.

Wall Street stocks closed higher on Tuesday following heavy losses on Monday. The Dow inched up 0.92% at the close, while the S&P 500 was 1.05% firmer and the Nasdaq saw out the session 1.25% stronger. Energy stocks rallied on Tuesday as U.S. natural gas prices hit 12-year highs and U.S. gasoline/petrol prices surged. Calls from U.K. lobbyist Energy Intensive Users Group for emergency measures to help industrial energy users cope with the gas crisis helped keep a lid on energy stocks’ advance. Cryptocurrency stocks finished broadly higher after Securities and Exchange Commission Chair Gary Gensler said he will not follow China’s lead in banning cryptocurrencies. Dow futures on the backfoot 108 points, or 0.32%, S&P500 -0.44%, alongside the Nasdaq down 0.59%.

ASIA
Mainland Chinese markets are closed for a public holiday. Hong Kong stocks fell on Wednesday, in line regional peers. The Hang Seng Index lost 0.45%, alongside the Nikkei down 0.96%. Japan’s Nikkei average reversed course on Wednesday to hit its lowest levels in over two months amid concerns over the impact of China’s debt crisis, while modest approval ratings for Japan’s Prime Minister Fumio Kishida disappointed investors. Australia’s ASX200 retreated 0.58%, weighed down by financials and industrials sectors, while energy and IT sector both gained 0.58% and 0.46%.