Asian Stocks Mixed, US & European Futures Lower as Central Banks Loom / Dow, S&P 500 hit new records

02/11/2021 Asian stocks are mixed this morning as traders evaluated a record-high close for U.S. equities and awaited key central bank decisions amid concerns about elevated inflation. Hong Kong’s Hang Seng index pared earlier gains, while a climb in Samsung Electronics Co. bolstered South Korean shares, with the Nikkei 225 declining 0.4%. U.S. and European futures slipped after optimism over corporate earnings saw the S&P 500 hit a new peak and the Dow Jones Industrial Average touch 36,000 for the first time. In Australia, the central bank scrapped its bond-yield target. The nation’s currency dropped after Governor Philip Lowe said it was still “likely to take some time” for inflation to sustainably return to target. Yields on three-year and 10-year debt declined. The U.S. 10-year Treasury yield and the dollar were little changed ahead of the Federal Reserve meeting. The policy review comes amid price pressures stoked by the most-widespread U.S. supply crunch since the oil crisis of 1973. The Fed is expected to announce a tapering of its bond-purchase program. The earnings season has underpinned the equity market, countering worries about inflation and tighter monetary policy.
Tencent trades 0.94% lower in Hong Kong. The Rand remains weak around 15.43 vs the USD. Oil steadied near $84 a barrel and Gold held an advance. Silver and palladium steadied, while platinum fell. Aluminum fell 1%, reversing earlier gains of as much as 1%. Nickel fell 1.8% and copper dropped 0.8%. Iron ore futures extended losses below $100 a ton. The FTSE JSE Top 40 futures are indicating a better start, up 280 points or +0.46%.
Here are some events to watch this week:

  • Fed rate decision, U.S. factory orders and durable goods, Wednesday
  • OPEC+ meeting on output, Thursday
  • Bank of England rate decision, Thursday
  • U.S. trade, initial jobless claims, Thursday
  • U.S. unemployment, nonfarm payrolls, Friday
    The JSE were closed yesterday due to Municipal Elections.
    The Independent Electoral Commission expects the first results of the country’s local government elections to start streaming in, on Tuesday after more than 8 million voters cast their ballots on Nov. 1.
  • Voter Turnout Slumps in South African Municipal Elections
  • Oramed to Start Oral Covid-19 Vaccine Trial in South Africa
  • Power-Cable Theft Hits Johannesburg Agricultural Market
  • South African Ruling Party Faces Key Test in Municipal Vote
  • South Africa Picks Bids for $3 Billion of Renewable Projects
  • S. Africa Needs $151 Billion for Green Power, McKinsey Says
  • Steinhoff Granted Leave to Appeal the Liquidation Bid Against It
  • S. Africa to Be Part of European Union COP26 Coal Project: RTRS
  • Distell’s Alcohol Sales Jump Shows Why Heineken Is Circling
  • Anglo American Sets Ambition to Halve Scope 3 Emissions by 2040
  • Rand Set for Biggest Drop in EM This Week: Inside South Africa

ECONOMIC DATA:

  • 11am: Oct. Absa Manufacturing PMI, est. 55.8, prior 56.8
  • Oct. Naamsa Vehicle Sales YoY, est. 9.8%, prior 15.8%

BOND SALES/PURCHASES:

  • 12pm: South Africa to Sell 1.3B Rand of 8.875% 2035 Bonds
  • 12pm: South Africa to Sell 1.3 Billion Rand of 8.25% 2032 Bonds
  • 12pm: South Africa to Sell 1.3 Billion Rand of 9% 2040 Bonds

EU/UK
European stocks kicked off November on a positive note Monday with investors reacting to corporate news and looking ahead to key central bank meetings. he pan-European Stoxx 600 index closed up 0.7%, with all sectors finishing in positive territory. Shares of Barclays bank slipped 0.8% after the investment bank announced Monday morning that CEO Jes Staley will stand down following an investigation into his relationship with Jeffrey Epstein. Shares of Ryanair rose 1.2% after the budget airline reported its first quarterly profit since before the onset of Covid-19. However, it said it expected to post an annual loss of up to 200 million euros ($231 million) as it would be forced to discount tickets to fill planes over the winter, Reuters reported. The positive start to November seen for Europe comes after more mixed trade in Asia-Pacific markets overnight as investors reacted to economic data that showed a mixed picture of Chinese manufacturing activity in October.

US
Stocks rose slightly to new records on Monday — the first trading day of November — after markets emerged from a historically tough seasonal period successfully. The Dow Jones Industrial Average rose 94.28 points to 35,913.84, helped by gains in Boeing and Dow Inc., closing at a fresh record. The S&P 500 rose nearly 0.2% to 4,613.67, closing at an all-time high. The tech-focused Nasdaq Composite added 0.6% to 15,595.92 and also hit a closing record. The small-cap benchmark Russell 2000 rallied 2.6% for its best day since Aug. 27. Tesla, which became a $1 trillion company last week, continued its gains for the year with shares up nearly 8.5%. Investors have been piling into bets on Tesla options as of late. Stocks linked to an economic recovery, such as Ford and Occidental Petroleum, were also higher. Ford gained 5% and Occidental Petroleum popped 3.8%. Airlines and retailers were mostly in the green, while mega cap tech stocks underperformed.

ASIA
Shares in Asia-Pacific were mixed in Tuesday trade, as the Australian central bank kept its cash rate target unchanged. South Korea’s Kospi jumped 1.53%, leading gains among the region’s major markets as shares of industry heavyweight Samsung Electronics jumped about 3%. Hong Kong’s Hang Seng index pared earlier gains but remained around 0.65% higher. Mainland Chinese stocks were lower as the Shanghai composite slipped 0.62% while the Shenzhen component declined fractionally. Japanese stocks slipped following their surge on Monday, and the Nikkei 225 declined 0.4% while the Topix index fell 0.51%. The S&P/ASX 200 in Australia dipped 0.32%. The Reserve Bank of Australia on Tuesday announced its decision to keep its cash rate target unchanged but decided to stop its target of 10 basis points for the April 2024 Australian Government Bond.

COMMODITIES
Gold held an advance ahead of key central bank decisions as traders weigh the prospects of tighter monetary policy and the impact that would have on the global recovery. Spot gold steadied at $1,792.15 an ounce at 7:50 a.m. in Singapore after rising 0.6% Monday. Silver and palladium steadied, while platinum fell.
Oil steadied near $84 a barrel as traders assessed the possibility that OPEC+ won’t step up the pace it’s increasing supply, while awaiting the latest insight into U.S. crude stockpile trends. West Texas Intermediate was little changed after a three- day gain. The Organization of Petroleum Exporting Countries and its allies meet Thursday to set output policy. Members including Kuwait have said that there’s no need add barrels at a faster clip even though key consumers including the U.S. have urged them to do so. Should that happen, the Biden administration may release crude from strategic reserves, according to RBC Capital Markets.
Aluminum fell as base metals resumed their retreat from a record high amid concerns about a slowing Chinese economy and elevated inflation. Aluminum fell 1% to $2,693 a ton, reversing earlier gains of as much as 1%. Nickel fell 1.8% to $19,340 and copper dropped 0.8%.

Iron ore futures extended losses below $100 a ton on shrinking steel output in China and signs economic growth is facing mounting headwinds. Prices in Singapore slumped for a fifth day as the world’s top steelmaker ramped up efforts to cap annual steel volumes.