Stocks, Futures Fall as China Fans Inflation Worry

10/11/2021 Asian Stocks and equity futures are lower as Chinese data fuelled concerns about inflationary pressures in the global economy. Treasury yields climbed ahead of a report on U.S. consumer prices. U.S. and European futures retreated after the S&P 500 declined for the first time in nine sessions, hurt by financial shares. The Nasdaq 100 underperformed, in part on Tesla Inc.’s loss of $199 billion in value on a host of negative news. U.S. and European futures retreated after the S&P 500 declined for the first time in nine sessions, hurt by financial shares. The Nasdaq 100 underperformed, in part on Tesla Inc.’s loss of $199 billion in value on a host of negative news.
Tesla fell nearly 12% on Tuesday, in its worst two-day performance since March, after Insider reported Michael Burry of “The Big Short” fame said in a tweet that Elon Musk may want to sell some shares to cover his personal debts.

Locally, the rand broke a four-day winning streak as more severe power cuts threaten businesses and the economy ahead of the medium term budget policy statement on Thursday. On the Markets, the JSE All-Share closed just 0.10% lower despite the Platinum names being under pressure, NPH and IMP were down 15.43 and 4.05% respectively after announcements yesterday that RBP shareholders voted against an IMP offer and that NPH had upped their stake in RBP to 32% . Volume was muted again with a large chunk trading late in the session and in the auction, total volume on the day was R 17.5 bln. We should be in for a mixed start today with US and European futures lower, Asia softer BUT Tencent up 2.03%. IG Top 40 – 203 points.

VODACOM TO ACQUIRE 55% INTEREST IN VODAFONE EGYPT FROM VODAFONE.

• Eskom to Reduce Power Cuts to 3,000MW From 5am Wednesday
• Telkom CEO Says ‘Not Evaluating Any Offer’ at the Moment
• Stanlib Says Be ‘a Little Cautious’ About South African Stocks
• Tencent Future Clouded by Slowing Sales and Crackdown Fallout
• Richemont PT Raised to 130 Swiss francs at Telsey
• Woolworths Raised to Buy at HSBC; PT 62 rand
• Telkom 1H Net Income 1.36B Rand Vs. 1.08B Rand Y/y
European stocks are expected to open lower as market participants wait for the next key reading of U.S. inflation data. Investors are awaiting the release of the latest U.S. consumer price index, a key inflation reading later today. The consumer price index is also expected to show a 0.6% jump compared to the prior month, or a year-over-year gain of nearly 6%, which would be the most in 30 years. In a busy day for earnings in Europe, reports are due from Credit Agricole, Engie, Alstom, EDF, Allianz, Continental, Dialog, E.On, Infineon, Siemens Energy, ABN Amro, Thomas Cook and Marks & Spencer, among others. Data releases include final inflation data for Germany in October and Italian industrial output for September.
In the US, the Dow closed down 0.31%, the S&P down 0.35% snapping an eight day winning streak and the Nasdaq was down 0.60 %. Tesla the big loser down 12% . yesterday, the Labour Department reported a 0.6% increase in the October producer price index, which is in line with the Dow Jones consensus estimate. Wholesale prices jumped 8.6% in October from a year ago, however, the hottest annual pace on record in almost 11 years. Investors are holding their breath for the latest consumer price index reading, which the Labour Department will report today the bell. Economists expect a 0.6% increase, or a year-over-year gain of nearly 6%, which would be the most in 30 years. They expect core CPI, which excludes food and energy and is the Federal Reserve’s preferred measure of inflation, to have risen 0.4%, or 4.3% year-over-year. Weekly jobless claims and mortgage applications to purchase a home are also due today.
Asian markets are lower across the region after Chinese data. The Chinese consumer inflation for October came in roughly in line with expectations, according to official data released earlier. The consumer price index for October rose 1.5% from last year, against expectations in a Reuters poll for a 1.4% increase. Producer prices, however, rose more than expected. The producer price index for October surged 13.5% from last year, above expectations in a Reuters poll for a 12.4% gain. MSCI’s broadest index of Asia-Pacific shares outside Japan traded 0.63% lower.
Oil prices rose again this morning extending strong gains in the previous session, after industry data showed U.S. crude stocks unexpectedly fell last week just as near term travel demand picked up with pandemic curbs easing. According to market sources, API data showed U.S. crude stocks declined by 2.5 million barrels for the week to Nov. 5, defying analysts’ estimates for a 2.1 million build in crude stocks in a Reuters poll. Brent $ 85.22 + 0.52%, WTI $ 84.37 + 0.24%.

Gold is a tad softer this morning after touching its best levels since early September yesterday. Gold – 0.34% $ 1826, Platinum – 0.68% $ 1055 and Palladium + 0.60% $ 2039.

What’s still to come this week.

• China’s Communist Party’s decision-making Central Committee meets through Thursday
• U.S. wholesale inventories, CPI, initial jobless claims Wednesday
• U.S. bond marked is closed in observance of Veterans Day Thursday
• China holds its annual Singles’ Day, the world’s biggest shopping festival, when e-commerce giants like Alibaba and JD.com Inc. lure buyers with bargains Thursday.