Asian Stocks, U.S. and European Futures Rise as Traders Mull Recovery / S&P 500 snaps 3-day losing streak


14/10/2021 Most Asian stocks rose along with U.S. equity futures Thursday as traders weighed the economic recovery from the pandemic and the prospect of tighter monetary policy to tackle inflationary pressures. Equities advanced in Japan and South Korea but fluctuated in China, where data showed the highest factory-gate inflation in almost 26 years. U.S. and European futures pushed higher after Wall Street snapped a three-day losing streak, with the tech-heavy Nasdaq 100 outperforming the S&P 500. Longer term Treasury yields increased, paring an overnight rally. The 10-year yield remained below 1.60%. A report showed U.S. inflation held above 5%, while the latest Fed minutes signaled a tapering of bond purchases from mid-November or mid- December. Singapore’s dollar rose after the central bank unexpectedly tightened monetary policy settings.
No read through from Tencent as Markets in Hong Kong are closed for a holiday. The Rand is holding it’s stronger level from yesterday around 14.75 vs the USD. Crude oil stabilized above $80 a barrel and gold dipped from the highest in nearly a month. Silver, platinum and palladium were all slightly lower. Zink, copper and iron ore all higher. The FTSE JSE Top 40 futures are indicating a better start, up 290 points or +0.49%.
Here are a few events still to watch this week:

  • Bank of America Corp., Morgan Stanley and Citigroup Inc. report earnings on Thursday
  • U.S. initial jobless claims, PPI on Thursday
  • Goldman Sachs Group Inc. reports earnings on Friday
  • U.S. business inventories, University of Michigan consumer sentiment, retail sales on Friday
    Yesterday the FTSE/JSE Africa All-Share Index closed little changed at 66,012.78. The precious metals & mining index fared well gaining 1.8%, with gold counters Anglogold and Goldfiels gaining 3.1% and 2.8% respectively. Platinum stocks Amplats gained the most, up 3.3% woth Sibanye adding 1.7%. Banks were lower despite a stronger rand with the retail sector flat on the day. The Rand was up 1.1% to 14.81 per US$, with the Yield on 10-year govt rand bonds that fell 15.30 bps to 9.73 %.
    IHS Holding, a pan-African telecom-towers company, is expected to list in New York in what could be the continent’s largest U.S. initial public offering. IHS is seeking a value of more than $7 billion. MTN, Africa’s largest wireless carrier, has a 29% stake and is selling some shares.
  • Eni to Exit South Africa Offshore Oil Block Amid Tech Challenges
  • South African Emergency Power Plan Hit by New Graft Allegations
  • South Africa’s Thungela Falls as China Coal Prices Cool
  • Famous Brands Sees 1H Basic EPS Growing to 86-106 Cents
  • Life Healthcare Group Revenue Rises 11-13% y/y for FY2021
  • Anchor Capital Sees Further Upside for South African Stocks in 2022

EARNINGS:

  • Long4Life, 1H (L4L SJ)
  • PSG Group, 1H (PSG SJ)

GOVERNMENT:

  • 9am: Minister in Presidency speaks on employment stimulus
  • 10am: Employer group briefing on steelworker strike
  • Event at ex-President Zuma’s home after release from prison on medical parole

CENTRAL BANKS:

  • 2pm: Central Bank Deputy Governor Kuben Naidoo takes part in panel
    EU/UK
    European stocks closed higher on Wednesday as strong earnings offset concerns about global growth and inflation. The pan-European Stoxx 600 closed up 0.7%, having started the session in the red. Tech stocks bounced 2.6% to lead gains, while banks fell 1.6%. Investors in Europe were digesting the latest inflation numbers out of the U.S. The consumer price index jumped 0.4% in September from the month prior and 5.4% year over year, the Labor Department reported Wednesday, against expected increases of 0.3% monthly and 5.3% annually in a Dow Jones poll of economists. On the data front, U.K. GDP was 6.9% higher in August than the same period last year, slightly outstripping a consensus forecast of 6.7%. The British economy is now 0.8% below its pre-Covid level, according to the Office for National Statistics. In terms of individual share price movement in Europe, Spain’s Banco de Sabadell fell 7.1% to lead a broad decline for the banking sector. THG shares were down 2.9%, after plunging as much as 35% Tuesday, which was triggered by the British e-commerce company’s CEO hitting out at short sellers during a capital markets day. Toward the top of the Stoxx 600, French energy company Spie climbed 8.5% after withdrawing from a race to buy utility company Engie’s services unit. British investment firm Man Group jumped 7.6% after a strong earnings report. An upbeat earnings forecast also came from German software group SAP, and French luxury goods company LVMH posted robust quarterly sales.
    US
    The S&P 500 snapped a three-day losing streak Wednesday as investors digested third-quarter earnings and insights into when the Fed might taper its asset-purchase program. The broad index closed 0.3% higher at 4,363, fluctuating between gains and losses throughout the session. The Nasdaq Composite ticked up 0.7% to 14,571, also breaking a negative streak. The Dow Jones Industrial Average was flat at 34,377 after shedding more than 260 points at its intraday lows. Minutes released Wednesday afternoon from the Federal Open Market Committee’s September meeting showed the central bank could begin tapering its asset-purchase program as soon as mid-November. “Participants generally assessed that, provided that the economic recovery remained broadly on track, a gradual tapering process that concluded around the middle of next year would likely be appropriate,” the minutes said. The September consumer price index released Wednesday morning jumped 0.4% from the month prior and 5.4% year over year, according to the Labor Department. Economists expected to see a month-to-month increase of 0.3% or annualized rate of 5.3%, according to Dow Jones. Third-quarter earnings season kicked off on Wednesday with JPMorgan Chase, which said that quarterly profit topped expectations following a boost from better-than-expected loan losses. Revenue for the largest U.S. bank by assets also came in higher than expected. JPMorgan shares fell 2.6% following the report despite the strong earnings report. The stock is up more than 26% this year. Delta Air Lines also reported financial results before the opening bell on Wednesday. The company posted higher-than-expected revenue and its first quarterly profit without counting federal aid since the start of the pandemic. However, the airline said higher costs of fuel and other expenses will pressure its fourth-quarter bottom line. Shares of Delta shed about 5.8%. Apple shares dipped 0.4% after a Bloomberg News report that said it is likely to cut iPhone 13 production because of chip shortages. Despite Apple’s retreat, technology stocks enjoyed a lift Wednesday from a lower U.S. 10-year Treasury note yield. A relatively strong tech sector helped support the Nasdaq Composite and S&P 500. Big Tech names Microsoft, Google-parent Alphabet and Amazon rose. Nvidia, Zoom and Salesforce also gained. Investors await earnings reports from Bank of America, Morgan Stanley, Citigroup, Wells Fargo and Walgreens Boots Alliance on Thursday.
    ASIA
    Asia-Pacific stocks were higher in Thursday trade as investors reacted to the release of China’s inflation data for September. The Shanghai composite in mainland China advanced 0.15% while the Shenzhen component climbed about 0.1%. Producer inflation surged in September, official data showed Thursday. The producer price index for September soared 10.7% as compared with a year ago, slightly above expectations for a 10.5% increase. China’s consumer price index also rose 0.7% in September as compared with a year ago. That was slightly below the 0.9% on-year increase as forecast. Singapore’s Straits Times index gained 0.35%, recovering from earlier losses after the country’s central bank unexpectedly tightened monetary policy on Thursday. Official advance estimates also showed Thursday that Singapore’s economy grew 6.5% year-on-year in the third quarter of 2021. That was largely in line with expectations from economists in a Reuters poll, who had expected a 6.6% year-on-year expansion for the third quarter. Elsewhere, the Nikkei 225 in Japan advanced 1.28% while the Topix index edged 0.45% higher. South Korea’s Kospi gained 0.93%. In Australia, the S&P/ASX 200 climbed 0.93%. MSCI’s broadest index of Asia-Pacific shares outside Japan traded 0.52% higher. Markets in Hong Kong are closed on Thursday for a holiday.
    COMMODITIES
    Gold steadied after its biggest advance in seven months as investors weighed concerns around stubbornly high inflation and the looming reduction in stimulus. Spot gold fell 0.2% to $1,789.06 an ounce, after advancing 1.9% Wednesday, the most since March 9. Silver, platinum and palladium were all slightly lower.
    Oil prices climbed on Thursday, reversing previous losses, as a bigger-than-expected draw in U.S. gasoline and distillate stocks prompted buying. Prices were also buoyed by expectations that soaring natural gas prices as winter approaches will drive a switch to oil to meet heating demand. Brent crude futures gained 52 cents, or 0.6%, to $83.70 a barrel after falling 0.3% on Wednesday. U.S. West Texas Intermediate (WTI) crude futures climbed 52 cents, or 0.7%, to $80.96 a barrel, after dropping 0.3% the previous day.
    Base metals prices are soaring, with international zinc prices spiking to the highest since 2007, as the global energy crisis crimps supply from China to Europe, threatening to boost inflationary pressures from rising commodity prices. Zinc rose as much as 6.9% to $3,637 a ton, the highest since July 2007, at $3,615. In Shanghai, prices surged 7.1%, their daily limit, to 25,700 yuan a ton. Copper also spiked with prices rising as much as 5% in Shanghai amid signs of acute tightness in supply. The cash-to- three-month spread in London was trading at the biggest backwardation since 2012.
    In ferrous markets, iron ore futures rebounded after sliding for the past two days. The contract in China is still heading for a weekly loss of about 3% as new steel output curbs for early next year are set to hurt consumption.