15/12/2021 Asian stocks are mixed this morning as traders braced for a faster withdrawal of Federal Reserve stimulus and weighed China’s economic slowdown as well as a setback from omicron for its vaccine program. Japanese shares gained while China and Hong Kong fluctuated. Chinese data ranging from new home prices to investment and retail sales suggested slowing growth amid a deepening property market slump and Covid disruptions. Meanwhile, initial lab findings indicated that China’s Sinovac shot — one of the most widely used in the world — doesn’t provide sufficient antibodies to neutralize the omicron variant. Some 2.3 billion doses of the vaccine have been administered, mostly in China and the developing world. U.S.-China tension also continues to bubble in the background: the Biden administration is considering imposing tougher sanctions on Semiconductor Manufacturing International Corp., China’s largest chipmaker. That’s part of an effort to limit the country’s access to advanced technology. S&P 500 and Nasdaq 100 futures wavered, while European contracts rose. Technology shares led a Wall Street drop Tuesday as investors soured on costlier parts of the stock market. Treasury yields and the dollar held gains. U.S. producer-price inflation hit a record of almost 10%, underlining the cost pressures rattling the American economy. The Fed on Wednesday is set to unveil a quicker tapering of bond purchases, paving the way for interest-rate hikes next year. The mix of high inflation, diminishing central bank support and omicron uncertainty is testing markets.
In commodities, spot gold steadied at $1,770 an ounce after dropping 0.9% on Tuesday. Silver and platinum declined, while palladium traded near the lowest level since March 2020. Oil declined for a third day as further restrictions were imposed to counter the spread of the omicron Covid-19 variant, with futures in New York tumbling to below $70 a barrel, extending this week’s decline to more than 2%. Three-month copper on the London Metal Exchange was steady at $9,417 a ton, but hovered close to a one-week low hit in the previous session. Aluminium eased 0.4%, zinc fell 1%, nickel inched 0.1% lower and lead was down 0.6%. Iron ore in Singapore gained 0.8% to $113.70 a ton.
The JSE Top 40 futures are indicating a lower start down 169 points or 0.26%, with Naspers and Prosus that could weigh on the market once again, as Tencent trades 0.8% lower in HK, with the Ausi metals & mining index down 0.9%. The Rand remains weak at around the 16.07 level vs the USD.
Here are some events to watch this week:
- China releases November industrial output, retail sales data, Wednesday.
- Fed rate decision, Wednesday.
- U.S. business inventories, retail sales, empire manufacturing, Wednesday.
- BOE rate decision, Thursday.
- ECB rate decision, Thursday.
- U.S. housing starts, initial jobless claims, industrial production, Thursday.
- BOJ monetary policy decision, Friday.
- S&P Dow Jones Indices quarterly rebalance effective after markets close, Friday.
- “Quadruple witching” day in the U.S. market, when options and futures on indexes and equities expire, Friday.
Locally the FTSE/JSE Africa All-Share Index closed up 0.2% to 71,544.82. The Rand weakened 0.9% to 16.16 per US$, with the Yield on 10-year govt rand bonds that fell 7.40 bps to 9.86%.
The U.K. will remove all 11 countries from its so-called Covid-19 red list, paving a way for the reopening of travel to South Africa and other countries just as the peak Christmas season gets underway.
- J&J Shot Shows No Neutralization Against Omicron in Lab Study
- Eskom Says Pollution Ruling May Shut 16 Gigawatts of Power
- Miners Top Europe’s Sector Leader Board After Iron Ore’s Rally
- Sibanye Names Mika Seitovirta Chief Regional Officer in Europe
- Telkom’s CEO Maseko to Remain in Advisory Capacity Until June 30
- 9am: Oct. Leading Indicator, prior 125.0
- 10am: Nov. CPI MoM, est. 0.5%, prior 0.2%
- 10am: Nov. CPI YoY, est. 5.5%, prior 5.0%
- 10am: Nov. CPI Core MoM, est. 0.1%, prior 0.2%
- 10am: Nov. CPI Core YoY, est. 3.2%, prior 3.2%
- 10:30am: 3Q Non-Farm Payrolls QoQ, est. -1.6%, prior -0.9%
- 10:30am: 3Q Non-Farm Payrolls YoY, prior 0.6%
- 11:30am: Nov. PPI YoY, est. 8.7%, prior 8.1%
- 11:30am: Nov. PPI MoM, est. 0.6%, prior 0.7%
- 10am: SARB Quarterly Bulletin
- 12pm: South Africa to Sell Debentures
European stocks fell for a fifth consecutive session Tuesday, with sentiment remaining negative amid the continuing spread of the omicron Covid variant. Investors are also focused this week on central bank action with the U.S. Federal Reserve, the Bank of Japan, the Bank of England and the European Central Bank all due to announce monetary policy decisions. U.K. employment data remained strong in November, with 257,000 staff added to payrolls, indicating that the end of the government’s furlough scheme has gone smoothly. In terms of individual share price movement, Vifor Pharma shares surged 12.6% after Australian biopharmaceutical giant CSL offered to by the Swiss company for $11.7 billion. British online supermarket Ocado climbed 5.5% after a strong earnings report and a victory in a patent infringement law suit against Norwegian robotics company Autostore. At the bottom of the European blue chip index, Rentokil shares fell 12.3% after the British pest control company agreed a $6.7 billion deal to buy U.S. rival Terminix. Britain’s BT Group slid 4.3% after Altice U.K., the telecoms investment company controlled by French billionaire Patrick Drahi, increased its stake in the company from 12.1% to 18%.
U.S. stocks fell on Tuesday as some large tech stocks moved lower and new inflation data continued to show a sharp rise in prices. The Nasdaq Composite led the decline, falling 1.14% to 15,237.64. The S&P 500 slid 0.75% to close at 4,634.09. The Dow Jones Industrial Average held up better than its counterparts but still fell 106.77 points, or 0.30%, to 35,544.18. Tech stocks were a main source of weakness on Tuesday, though the sector trimmed its losses in afternoon trading. Microsoft was a major drag on the market averages, falling 3.2%. Fellow software stock Adobe dropped 6.6%. Elsewhere, automaker Ford slid nearly 1.9% following news that by 2030 Toyota would be investing $35 billion into battery-powered electronic vehicles, a space in which Ford has sought to establish itself as a leader. Tesla shares fell 0.8% after filings with the Securities and Exchange Commission revealed that CEO Elon Musk sold another $906.5 million in shares. Shares of Netflix, Apple and Amazon all ended the session in negative territory as well. The down day on Wall Street followed the November reading for the producer price index showing a year-over-year increase of 9.6%, the fastest pace on record and above the 9.2% expected by economists, according to Dow Jones. The index rose 0.8% month over month, above the 0.5% expected. Investors will be watching closely this week for commentary around if the Fed plans to accelerate the end of its bond-buying program. At present, the central bank’s asset purchase program will end in June 2022, but several officials have spoken about ending the purchases sooner.
Chinese markets traded muted on Wednesday as investors digested key Chinese economic data. Meanwhile, Chinese biotech firm BeiGene made its debut in Shanghai. The Shanghai composite was near the flatline and the Shenzhen component was down 0.31%. Hong Kong’s Hang Seng index inched down 0.1%. Chinese biotech firm BeiGene made its debut in Shanghai’s Nasdaq-style board Star Market at an offer price of 192.6 yuan ($30.24) per share, after raising over $3 billion. However, the stock opened 8.1% below that offer price, at 176.96 yuan per share. It last traded at 170.68 yuan, or more than 10% down. The company is already listed in Hong Kong and the Nasdaq in the U.S. China released a slew of key economic data on Wednesday. Its industrial output for November was up 3.8% year-on-year, more than the 3.5% increase in October, and better than the 3.6% expected in a Reuters poll. Data also showed that retail sales in November rose 3.9% year-on-year, less than October’s 4.9% increase, and below the expectations of 4.6% in a Reuters poll. Elsewhere, Japan’s Nikkei 225 traded near flat, while the Topix rose 0.48%. Toyota shares jumped 3.62% after it announced it will invest eight trillion yen ($70 billion) into electrifying its vehicles by 2030, according to Reuters. South Korea’s Kospi lost 0.18% while in Australia, the S&P/ASX 200 dipped 0.7%. The Japanese yen traded at 113.71 per dollar, as it continued to weaken from levels around 113.5. The Australian dollar rose slightly to $0.7117.
Gold held onto its worst daily loss since the end of November as investors weighed the latest U.S. inflation data and counted down to the conclusion of the final Federal Reserve meeting of the year later Wednesday. Spot gold steadied at $1,770.44 an ounce after dropping 0.9% on Tuesday. Silver and platinum declined, while palladium traded near the lowest level since March 2020.
Oil declined for a third day as further restrictions were imposed to counter the spread of the omicron Covid-19 variant while the outlook for demand in China dimmed as Beijing cracks down on the virus, pollution and rule-breakers. Futures in New York tumbled to below $70 a barrel, extending this week’s decline to more than 2%. China, the world’s biggest importer of crude, is set to start 2022 with a subdued appetite that will partially offset the traditional increase in demand from refineries to replenish inventories during the winter months.
London copper prices held steady on Wednesday as investors cautiously awaited cues on how soon the U.S. Federal Reserve would start raising interest rates, while sentiment got a lift amid hopes of further stimulus measures from top consumer China. Three-month copper on the London Metal Exchange was steady at $9,417 a ton, as of 0525 GMT, but hovered close to a one-week low hit in the previous session. LME aluminium eased 0.4% to $2,619 a ton, zinc fell 1% to $3,273 a ton, nickel inched 0.1% lower to $19,505 a ton and lead was down 0.6% at $2,271.5 a ton.
Iron ore advanced on expectations that China’s steel production will rebound in December after slumping last month to the lowest level for this time of year since 2017. The country’s crude steel output may total 1.03 billion tons this year, down from a record 1.065 billion tons in 2020, according to an executive with the China Iron & Steel Association. Iron ore in Singapore gained 0.8% to $113.70 a ton. Prices rose 0.5% in Dalian, while steel rebar and hot- rolled coil climbed in Shanghai.