25/11/2021 Asian stocks are steady as traders weighed China’s efforts to cushion its economy as well as Federal Reserve minutes flagging the risk of a faster reduction in monetary stimulus to fight elevated inflation. MSCI Inc.’s Asia-Pacific share index snapped a three-day drop. Equities came off their lows in Hong Kong and China, where Beijing urged local governments to boost investment to counter a growth slowdown. Meanwhile, the Chinese city of Chengdu sought to ease a cash crunch at property developers. U.S. and European futures are higher after modest Wall Street gains overnight. The latest U.S. data showed a solid economic recovery, including resilient consumer spending despite persistent price pressures. Fed officials at their last meeting were open to a quicker removal of policy support to curb inflation, according to the minutes of the gathering. Elsewhere, South Korea followed New Zealand in raising interest rates to contain inflation.
Crude oil is steady as traders await the response of OPEC+ to a coordinated release of strategic reserves by consuming nations. Gold steadied, with Platinum, palladium and silver that also advanced. Base metals are broadly higher, copper gaining 0.1% while aluminum rose 0.2%. Iron ore futures in Singapore jumped 4% to $102.65 a ton.
Tencent trades 1.3% higher in Hong Kong following a recovery in global tech stocks, despite state broadcaster CCTV on Wednesday reported that Tencent must get approval from Chinese regulators to send out updates for its apps. The move comes after regulators found several apps made by China’s most valuable technology company violated data protection rules on a number of occasions this year.
The Rand is slightly stronger at around the 15.87 level vs the USD, with the FTSE JSE Top 40 futures indicating a better start, up 411 points or 0.64%.
Here are some events to watch this week:
- U.S. Thanksgiving Day: U.S. equity, bond markets closed Thursday
- Bank of England Governor Andrew Bailey speaks with Mohamed El Erian at a Cambridge Union event. Thursday
Locally the FTSE/JSE Africa All-Share Index closed down 0.6% to 70,558, with the banking and retail sectors weighing the most closing down 1.8% and 1.3% respectively on the back of a weaker rand. Old Mutual were the biggest loser in the top 40 shedding 5.2% after publishing a voluntary operating update on Tuesday, with Naspers and Prosus closing negative on the day. The precious metals & mining index also saw the session out in the red losing 1.4%. The Rand down 0.3% to 15.88 per US$, with the Yield on 10-year govt rand bonds that rose 7.70 bps to 10.25%.
President Cyril Ramaphosa answers lawmaker’s questions in the National Assembly at 2 p.m.. Questions to be posed will cover various issues including government’s plans to reform power utility Eskom and address the electricity crisis, service delivery following the Nov. 1 municipal elections and coalition pacts as well as the nation’s energy policy.
- South Africa Asks J&J, Pfizer to Pause as Vaccines Pile Up
- Africa Pension Giant to Cut $4.4 Billion PIC Unit Allocation
- South African Business Mood Muted After Steel Strike, Power Cuts
- Billionaire Motsepe Backs South African Fintech Startup Crossfin
- Eskom Failures Leave South Africa Set for Years of Power Cuts
- Sibanye-Stillwater, Labor Unions Fail to Reach Deal on Wages
- AVI Confirms Talks Taking Place With Mondelez Over Snacks Unit
- Karooooo Gains as Avior Initiates at Outperform
- De Beers Sells $430m of Rough Diamonds at Ninth Sale of 2021
- Hosken Consolidated Investment (HCI SJ)
- Mr Price Group Ltd. (MRP SJ)
- 11:30am: Oct. PPI MoM, est. 0.6%, prior 0.9%
- 11:30am: Oct. PPI YoY, est. 8.0%, prior 7.8%
- 11am: Minister in the Presidency, Mondli Gungubele briefs reporters on cabinet meeting outcomes
- 5pm: Ruling African National Congress holds briefing on council coalitions after local government elections
- Annual General Meetings: BLU SJ, CLH SJ, MTM SJ, PAF LN, REM SJ
- Other Events: HMSO LN
- Earnings Calls: MRP SJ
- Sales Results: GRT SJ
European stocks eked out small gains on Wednesday as traders digested a fresh batch of economic data and monitored the region’s latest Covid surge. The pan-European Stoxx 600 closed up 0.1% after choppy trading earlier in the session. Telecoms shares rose 1.2% to lead the gains while autos stocks sank 1.5%. European investors continue to monitor the acute Covid crisis in the region this week, with more countries considering stricter restrictions and partial lockdowns to curb rising infections. Germany is expected to make a decision on stricter measures on Wednesday amid a surge in cases there, and France recorded more than 30,000 new daily infections on Tuesday for the first time since August. In political news, German parties agreed to form a three-way coalition after almost two months of talks. The deal will see Olaf Scholz, the center-left Social Democratic Party’s candidate, become Germany’s next chancellor, replacing Angela Merkel who has led Germany for 16 years. On Wednesday, Germany’s Ifo business climate index fell in November, dropping to 96.5 from October’s 97.7, as supply chain bottlenecks, inflation and the prospect of further Covid measures continue to darken the short-term outlook for Europe’s largest economy. The business conditions survey fell to 99.0 this month from 100.2 in October, while business expectations dropped to 94.2 from 95.4. Earnings before the bell came from Johnson Matthey, Virgin Money and United Utilities. In terms of individual share price movement, Telecom Italia jumped 15.6% following a report suggesting U.S. private equity giant KKR is considering upping its buyout bid for Italy’s largest phone company. At the bottom of the European blue chip index, British genetics firm Genus plunged 10% after its trading update, which indicated that full-year profit before tax would likely be moderately lower than previous estimates.
U.S. stocks pushed modestly higher on Wednesday as the recent jump in bond yields took a breather, allowing tech stocks to recover. The S&P 500 ticked up 0.23% to close at 4,701, while the tech-heavy Nasdaq Composite added 0.44% to finish at 15,845. The Dow Jones Industrial Average lost just 9 points and settled at 35,804. Shares of Facebook-parent Meta rose 1.1% to bolster the Nasdaq, while Roku and Peloton shook off rough starts to the week to rise more than 2% each. Computer hardware company HP’s shares got a 10.1% lift after reporting earnings that beat on the top and bottom lines and issuing higher first-quarter earnings guidance. The move in rates earlier this week sent investors fleeing from tech and growth shares, while boosting some bank stocks and energy shares. The meetings from the latest Fed meeting, released on Wednesday, showed that the central bankers were ready to accelerate the timetable for slowing asset purchases and raising the benchmark funds rate if inflation remains high. Stocks moved lower after the minutes were released. The market did receive some bullish news on the economic front. Initial jobless claims for the prior week came in at 199,000, the lowest level in more than 50 years. GDP growth for the third quarter was revised up slightly to 2.1%, though economists expected it to rise to 2.2%. Personal income and consumer spending both rose more than expected in October. The data was not uniformly positive, however, as durable goods orders showed an unexpected decline in October. Core personal consumption expenditures, the Fed’s preferred inflation measure, was up 4.1% year over year for October, matching estimates. Earnings reports drove some of the biggest individual moves on Wednesday, as traditional retail stocks took a hit following poor quarterly results. Gap lost 24% and Nordstrom tumbled about 29%. Both companies reported earnings misses for the most recent quarter. Elsewhere, software stock Autodesk fell 15.4% after the company issued disappointing fourth-quarter guidance. Rising Covid cases in Europe continued to worry investors. Germany was considering a full Covid lockdown. U.S. markets are closed Thursday for Thanksgiving and will close early on Friday in a shortened session.
Shares in Asia-Pacific were mixed in Thursday trade as investors reacted to the Bank of Korea’s rate decision. South Korea’s Kospi dipped 0.39% after the Bank of Korea raised its policy rate by 25 basis points to 1%, a move that was largely expected by analysts in a Reuters poll. Following the decision, the Korean won traded 1,189.78 per dollar, weaker than levels around 1185 seen against the greenback yesterday. The South Korean central bank’s decision followed a similar move by the Reserve Bank of New Zealand on Wednesday. In Hong Kong, the Hang Seng index gained 0.12%. Shares of developer Kaisa Group soared more than 18% as they resumed trading. Kaisa on Thursday announced an offer to bondholders to exchange their existing bonds with new bonds that have an extended maturity. Mainland Chinese stocks declined, with the Shanghai composite shedding 0.1% and the Shenzhen component falling 0.236%. Elsewhere in Japan, the Nikkei 225 gained 0.79% while the Topix index advanced 0.4%. Australian stocks wavered between positive and negative territory, with the S&P/ASX 200 last hovered fractionally higher. MSCI’s broadest index of Asia-Pacific shares outside Japan was little changed.
Elsewhere, South Korea followed New Zealand in raising
interest rates to contain inflation. after a swath of positive economic data from the U.S. signaled a solid recovery, even as inflationary pressures remain elevated. Spot gold rose 0.2% to $1,792.18 an ounce, after a five-day drop. Platinum, palladium and silver also advanced.
Oil was steady in Asia after OPEC said a planned coordinated release of reserves may swell a crude surplus expected early next year. Futures in New York traded near $78 a barrel after closing little changed on Wednesday. The projection was made by the group’s advisory body — the Economic Commission Board – ahead of an OPEC+ meeting next week. Some of the cartel’s delegates warned this week that releasing strategic reserves may lead to the alliance holding back crude supply in January.
Base metals are broadly higher amid continued signs of supply tightness across the industrial-metals complex. Better-than-expected U.S. economic data on consumer spending and new home sales are also supporting prices. ING says some optimism for China’s recovering real-estate sector is lending support for base metals. The three-month LME contract for copper is 0.1% higher at $9,844.5 a ton, while the corresponding aluminum contract rose 0.2% to $2,709.0 a ton.
Iron ore extended gains as growing optimism on the demand outlook from China’s real estate sector outweighs concerns about some pollution curbs in the nation’s key steel- making city. China’s top economic official called for measures to stabilize house prices as the property market slowdown continues to take a toll on the economy. Iron ore futures in Singapore jumped 4% to $102.65 a ton. Prices in Dalian closed 5% higher, extending gains to a fourth day. Steel rebar and hot-rolled coil futures in Shanghai advanced about 4%.