Stocks Near Record, Bond Curve Steeper After Fed

04/11/2021 Global stocks hovered around record levels Thursday after the Federal Reserve unveiled an expected tapering of stimulus and said it will be patient on raising interest rates. Treasury yields were steady. MSCI Inc.’s world share gauge was on course for a new peak, as Japan, China and South Korea climbed. U.S. futures fluctuated in the wake of all-time highs for the S&P 500, Dow Jones Industrial Average, Nasdaq 100 and Russell 2000. The Fed indicated it was alert to inflation risks but still sees them as likely transitory due to pandemic-related supply and demand imbalances. Stocks have been bolstered by solid corporate earnings, the prospect of a gradual reduction in monetary policy largesse and the view that supply-chain and labor disruptions will eventually be resolved.
Tencent trades 1.7% higher in Hong Kong. The Rand is steady around 15.30 vs the USD. Oil declined for a third day as investors turned their focus to an OPEC+ meeting, with Gold edging higher from a three-week low. Silver, platinum and palladium all advanced. Copper rose as much as 1.8% to $9,633 a metric ton, before trading at $9,595 in Shanghai, with Iron ore futures that fell over 2%. The FTSE JSE Top 40 futures are indicating a better start, up 504 points or +0.81%.
Here are some events to watch this week:

  • 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 FTSE/JSE Africa All-Share Index cl0osed up 1.2% to 68,587, mostly supported by Naspers and Prosus with the counters surging 3.3% and 2.8% respectively. Resources closed up 1.4% with Exxaro and Northam Plats leading the way gaining 4.9% and 3.3% respectively. The property and retail sectors also closed in the green, ending the session up 2.5% and 1.5%, with the banking sector declining 0.40%, Nedbank down 2.2%. The Rand was little changed at 15.44 per US$, with the Yield on 10-year govt rand bonds that rose 2.50 bps to 10.19%.
    South Africa’s ruling party is set to lose its majority in the stronghold province of KwaZulu-Natal, where unrest erupted in July following the arrest of former President Jacob Zuma. Counting is ongoing: Read More
  • Fitch Raises South Africa 2021 GDP Growth Forecast to 5.3%
  • Old Mutual Unit in Talks to Buy Out Brian Joffe’s Long4Life
  • Anglo Heir Apparent Wanblad Named CEO as Cutifani Retires
  • Johannesburg Stock Exchange Commits to 2050 Net Zero Target
  • Redefine Soars in Johannesburg After Dividend Resumption News

EARNINGS:

  • 7am: MTN (MTN SJ), 3Q
  • Afrimat Ltd. (AFT SJ)
  • Textainer Group Holdings Ltd. (TGH US)

ECONOMIC DATA:

  • 9:15am: Oct. Standard Bank South Africa PMI, est. 50.5, prior 50.7
  • 1pm: Sept. Electricity Consumption YoY, prior 2.2%
  • 1pm: Sept. Electricity Production YoY, prior 2.0%

CORPORATE EVENTS:

  • Annual General Meetings: AVI SJ, TRU SJ

EU/UK
European stocks closed slightly higher Wednesday as investors prepared for the latest comment and monetary policy decision from the U.S. Federal Reserve. The pan-European Stoxx 600 closed up by 0.3%, with oil and gas stocks dropping 3% while miners gained 1%. Investors around the world will be closely following the latest decision from the U.S. Federal Reserve on Wednesday. Following the Federal Open Market Committee’s two-day meeting, the central bank is widely expected to announce it will begin to wind down its $120 billion in monthly bond purchases and end the program entirely by the middle of 2022. European Central Bank President Christine Lagarde told an event in Lisbon on Wednesday that the ECB is very unlikely to hike interest rates in 2022 as inflation remains too low, pushing back market expectations. Earnings in Europe came from Suez, BMW, Zalando, Lufthansa, Geberit, Wolters Kluwer, Next, Smurfit Kappa and Intesa Sanpaolo on Wednesday. On the data front, euro zone unemployment fell to 7.4% in September from 7.5% in August, official statistics confirmed on Wednesday, in line with expectations. TeamViewer was the strongest performer on the Stoxx 600 on Wednesday, gaining more than 10% after the German remote desktop software company reported a strong set of third-quarter earnings and confirmed its outlook.
At the bottom of the European blue chip index, Vestas Wind Systems plunged more than 18% after missing third-quarter earnings expectations and cutting its profit forecast, as supply chain issues and inflation continue to weigh on the Danish wind turbine maker.

US
Stocks rose to new records on Wednesday after the Federal Reserve made its long-anticipated announcement to slow the monthly bond purchases the central bank implemented during the pandemic. Major averages climbed steadily into the green as the central bank said it will begin to scale back the bond buying later this month and reiterated that it would be in no rush to raise interest rates after finishing the taper next year. The Dow Jones Industrial Average rose 104.95 points to 36,157.58, after being down more than 160 points earlier in the session, and closed at a new record. The S&P 500 traded up 0.65% to 4,660.57 to a new all-time high. The Nasdaq Composite added 1% to 15,811.58 and closed at a record. This is the fourth session in a row that all three major averages closed at new highs. The Russell 2000 rose 1.8% to 2,404.28 and notched a record close. The small-cap benchmark is up 4.7% this week. A slew of corporate earnings and announcements jolted certain equities on Wednesday. Lyft jumped 8.2% on strong third-quarter results and CVS Health rose 5.7% on better-than-expected earnings. But Zillow fell 24.8% after announcing it will close its home buying and flipping business. Shares of Bed Bath & Beyond rose on a partnership announcement with Kroger but the 15.2% surge that followed was likely fueled by a short squeeze.
Activision shares tumbled, falling about 14.1% after it said the launch of two games would be delayed. The company also issued a weaker holiday outlook though it did beat profit estimates for the quarter.

ASIA
Shares in Asia-Pacific rose in Thursday trade following the U.S. Federal Reserve’s announcement that it will start tapering the pace of its bond purchases later in November. The Nikkei 225 in Japan gained 0.78% while the Topix index advanced 0.98%. South Korea’s Kospi also climbed 0.46%. In mainland China, the Shanghai composite edged 0.64% higher while the Shenzhen component jumped 1.204%. Hong Kong’s Hang Seng index was up 0.27%. Australian stocks rose in trade as the S&P/ASX 200 gained 0.38%. MSCI’s broadest index of Asia-Pacific shares outside Japan climbed 0.36%. Markets in Singapore, Malaysia and India were closed on Thursday for a holiday. The Japanese yen traded at 114.19 per dollar, weaker than levels below 113.6 seen against the greenback earlier this week. The Australian dollar changed hands at $0.7452, following its plunge from above $0.752 earlier in the trading week.

COMMODITIES
Gold edged higher from a three-week low as the Federal Reserve signaled it will be patient on raising interest rates, after announcing it will start reducing bond purchases this month. Spot gold climbed 0.3% to $1,775.84 an ounce after falling as much as 1.6% Wednesday to the lowest intraday level since Oct. 13. The Bloomberg Dollar Spot Index rose 0.1% after dropping 0.3% in the previous session. Silver, platinum and palladium all advanced.
Oil declined for a third day as investors turned their focus to an OPEC+ meeting on production policy after U.S. crude stockpiles expanded. Futures in New York slid near $80 a barrel after losing almost 4% over the past two sessions. OPEC+ is gathering later Thursday and the group is expected to stick to its planned gradual output hike for December, despite calls from consumers to pump more. In the U.S., crude inventories climbed for the fifth time in six weeks, according to Energy Information Administration data.
Copper rebounded from the lowest close in almost a month, with most base metals higher after the Federal Reserve signaled patience towards interest-rate hikes in a move that eased concerns over imminent stimulus withdrawal. Copper rose as much as 1.8% to $9,633 a metric ton on London Metal Exchange, before trading at $9,595 in Shanghai. Prices closed at $9,458.50 on Wednesday, the lowest since October 8. Zinc advanced 1.2% to $3,347.50 and nickel gained 1.1%.
Iron ore futures fell over 2% in both Singapore and Dalian as the steel-making ingredient extended its plummet from the May peak amid China’s campaign to reduce steel production to cut emissions. Rebar and hot-rolled coil also slid more than 2% in Shanghai. China’s top economic planner has called for support for domestic iron ore development to ensure supply.