Asian Stocks, U.S. & European Futures lower on Inflation, China Risks / Dow sheds 250 points

12/10/2021 Stocks and U.S. equity futures fell Tuesday, hurt by concerns about elevated inflation stoked by energy costs and the possibility of a widening regulatory crackdown in China. Treasury yields were steady. MSCI Inc.’s Asia-Pacific index snapped a three-day climb, with the technology sector leading losses and South Korea underperforming. Signs that Beijing is widening its scrutiny of private and state enterprises soured the broader mood. U.S. and European futures retreated following declines on Wall Street as the prospect of a slowing recovery from the pandemic shadowed trading. Oil held above $80 a barrel amid a power crisis from Europe to Asia. China’s thermal coal futures surged to a record for a second day. The energy crunch is squeezing supplies of aluminum, whose price hit a 13-year high. Other industrial metals have also rallied, fueling inflationary pressures. The 10-year U.S. Treasury yield was little changed as the cash market reopened from a holiday..
Tencent trades 2.9% lower in HK and should way on Naspers and Prosus. The Rand is hovering around the 15.06 level vs the USD, slightly weaker than yesterday. Gold steadied as investors weighed concerns over inflation with commodity prices like aluminum, copper, iron ore and zink all lower. Silver and Palladium steadied with Oil holding above $80 a barrel. The FTSE JSE Top 40 futures are indicating a lower start, down 420 points or -0.70%.
Here are a few events to watch this week:

  • Atlanta Fed President Raphael Bostic speaks on inflation Tuesday
  • U.S. FOMC minutes and CPI Wednesday
  • China PPI, CPI Thursday
  • U.S. initial jobless claims, PPI Thursday
    Yesterday the FTSE/JSE Africa All-Share Index closed up 1.3% to 66,101, mostly supported by resources with the index gaining a healthy 2.8%. Anglo American lead the way surging 4.4%, with Glencore and BHP both up over 3%. Banks and retailers started losing steam as the rand weakened towards the close, with the banking index closing flat and the retail index managed to eke out a gain of 0.3%. The Rand was down 0.8% to 15.05 per US$, with the Yield on 10-year govt rand bonds that rose 4.50 bps to 9.91%.
    South Africa’s President Cyril Ramaphosa on Monday declared Nov. 1, the day of local government elections, a public holiday.
  • South Africa’s ANC Rebukes Deputy President on Re-Election Bid
  • South Africa Rate-Hike Bets Jump on Upside Risks to Inflation
  • Telkom Says Netflix No Longer Available on South Africa Provider
  • South Africa Business Mood at One-Year Low on Covid Curbs, Riots
  • RMB Says Brightbridge Offers 1.75b Rand for Most Property Assets
  • FirstRand Unit Starts Market for South African Debt Instruments
  • South Africa Bans Cement Imports on State Projects: Business Day
  • CSG Receives Non-Binding Offer at 35 Cents/Share, May Delist
  • Rand Merchant Bank Revises Rand Year-End Forecast Weaker
  • MTN Uganda IPO Plan Values Business at About $1.25 Billion
  • KAP Cut to Hold at Investec; PT 4.90 rand


  • 11:30am: Aug. Mining Production YoY, est. 3.1%, prior 10.3%
  • 11:30am: Aug. Mining Production MoM, est. 0.5%, prior 4.1%
  • 11:30am: Aug. Gold Production YoY, prior 13.4%
  • 11:30am: Aug. Platinum Production YoY, prior 10.3%
  • 1pm: Aug. Manufacturing Prod SA MoM, est. 6.1%, prior -8.0%
  • 1pm: Aug. Manufacturing Prod NSA YoY, est. 0.2%, prior -4.1%


  • South Africa’s Transport Minister, Fikile Mbalula, City of Joburg Mayor, Mpho Moerane, Dialdirect and Discovery Insure launch Pothole Patrol App


  • 11am: South Africa to Sell ZAR1.3 Bln 9% 2040 Bonds
  • 11am: South Africa to Sell ZAR1.3 Bln 8% 2030 Bonds
  • 11am: South Africa to Sell ZAR1.3 Bln 8.75% 2048 Bonds


  • Sales Results: THA SJ
    European stocks were muted on Monday, searching for direction after a volatile week. The pan-European Stoxx 600 hovered around the flatline and finished flat, with travel and leisure stocks shedding 1% while basic resources gained 3%. Goldman Sachs on Sunday cut its forecast for U.S. economic growth to 5.6% in 2021 and 4% in 2022, citing a drop-off in fiscal support and a slower consumer spending recovery. three European Central Bank policymakers on Friday discussed the possibility of exiting pandemic-era monetary and fiscal support measures even if it makes some governments unhappy, according to reports from a panel discussion in Slovakia. The ECB is expected to make a decision on its extraordinary stimulus measures in December. In corporate news, Italy’s FIM-CISL union said on Friday that the global semiconductor shortage would hit Stellantis’ Italian production harder and for longer than the Covid-19 pandemic. The carmaker has halted operations at some of its factories in Europe and the U.S., and expects to produce 1.4 million fewer vehicles this year. ASOS announced Monday that CEO Nick Beighton would step down with immediate effect after the company issued a profit warning on the back of higher logistics costs and supply chain disruption. The British online fashion retailer’s shares fell more than 8% in early trade. On the Stoxx 600, British drinks company Britvic fell 4.8% to lead losses, while Anglo American gained 4.2%.
    U.S. stocks fell to start the week Monday as investors weighed surging oil prices, economic worries and major third-quarter earnings results ahead. The Dow Jones Industrial Average shed 250 points, or 0.7%, to close at 34,496. The blue chip average was up more than 200 points at its intraday high. The S&P 500 ticked down 0.7% to 4,361. The Nasdaq Composite dipped 0.6% to 14,486. Stocks churned for most of the day, but selling increased in the final hour, with the major averages closing the session at their lows. The U.S. bond market was closed Monday for Columbus Day. U.S. oil benchmark WTI crude oil topped $82 a barrel at its session highs before trading around $80 Monday. The surging prices added to looming concerns about inflation. Energy stocks gained for most of the session as oil prices jumped, but also rolled over with the broader market into the close. Eight out of 11 S&P 500 sectors closed lower in Monday’s session, with utilities as the worst performing cohort. Meanwhile, Goldman on Monday cut its U.S. economic growth forecast. The firm lowered its 2022 growth estimate to 4% from 4.4% and took its 2021 estimate down a tick to 5.6% from 5.7%. The firm cited the expiration of fiscal support from Congress and a slower-than-expected recovery in consumer spending, specifically services. This week, major banks will kick off their third-quarter earnings reports. JPMorgan posts results Wednesday, with Goldman Sachs, Bank of America, Morgan Stanley, Wells Fargo and Citigroup following later in the week. Delta Airlines and Walgreens Boots Alliance reports are also on deck. Investors will be looking for insights into supply chain challenges, particularly going into the holiday shopping season. Analysts estimate an earnings growth rate of 27.6% for the S&P 500 in the third quarter, which would be the third-highest growth rate since 2010.
    Shares in Asia-Pacific tumbled on Tuesday, with major indexes from China to South Korea falling at least 1%. The Hang Seng index in Hong Kong dropped 1.02% by Tuesday afternoon. Shares of China Evergrande New Energy Vehicle, on the other hand, surged nearly 6% after the firm vowed on Monday to start producing electric vehicles next year. The company is linked to debt-laden developer Evergrande, which has already missed multiple coupon payments for its bonds in recent weeks. Mainland Chinese stocks also declined, with the Shanghai composite down 1.04% while the Shenzhen component shed 0.984%. South Korea’s Kospi dropped 1.53%. In Japan, the Nikkei 225 slipped 1.02% while the Topix index shed 0.77%. Australian stocks also fell into negative territory, erasing earlier gains, as the S&P/ASX 200 shed 0.37%. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.02%.
    Gold steadied as investors weighed concerns over inflation, fueled by a surge in energy and metal prices that threatens to derail the economic recovery. Focus will turn to the U.S. on Wednesday, where consumer price index data are expected to show price pressures remained elevated last month. Spot gold gained 0.2% to $1,757 an ounce, after retreating 0.2% Monday. Silver and platinum steadied, while palladium fell 0.4% after advancing for three straight days.
    Oil held above $80 a barrel on expectations that a power crisis from Asia to Europe will lift demand and tighten global balances. West Texas Intermediate futures edged higher in Asian trading after closing up 1.5% on Monday. Oil markets are tightening rapidly in the run-up to the Northern Hemisphere winter as shortages of natural gas and coal boost demand for alternative power generation fuels such as diesel and fuel oil.
    London copper prices fell on Tuesday, weighed down by worries of lower demand as rising electricity prices raised concerns that downstream consumers would be forced to cut production. Three-month copper on the London Metal Exchange fell 1.8% to $9,367 a ton, while the most-traded November copper contract on the Shanghai Futures Exchange edged up 0.1% to 69,630 yuan ($10,791.00) a ton, tracking overnight gains in London. LME aluminum declined 1.2% to $3,028 a ton, zinc was down 0.8% at $3,204 a ton and tin decreased 1.6% to $35,800 a ton.
    Iron ore futures halted a four-day surge as China’s pledge to curtail steel output clouds the outlook for demand. Prices fell more than 6% on Tuesday, though are still up about 40% in just three weeks. The market has been whipsawed, with a gauge of 30-day volatility heading back toward a record, as investors grapple with how China’s measures to cap annual steel volumes from last year’s record will be implemented. The winter curbs and the Winter Olympics will also affect steel smelting activities, further pressuring demand China’s manufacturing sectors are also dealing with an escalating energy crisis that’s restricting industrial activities. Overall industrial power use could be cut by 10% to 15% in November and December, which would potentially translate into a 30% slowdown in activity in the most energy-intensive sectors like steel, chemicals and cement-making, according to UBS Group AG. Iron ore in Singapore sank as much as 6.9% to $126.05 a ton, before trading at $127.65 by 10:46 a.m. local time. Prices in Dalian dropped 3.2%.