Asian Shares Slip As S&P And Nasdaq Drop

05/01/2022 Asian shares slipped on Wednesday following a mixed Wall Street session on Tuesday. Higher U.S. Treasury yields weighed on global tech firms and pushed up the dollar. U.S. yields rose on Tuesday as bond investors geared up for interest rate hikes from the Federal Reserve by mid-year to curb stubbornly high inflation. MSCI’s broadest index of Asia-Pacific ex. Japan lost 0.87%. Japan’s Nikkei was little changed, while Hong Kong underperformed regional peers. Tencent dropped almost 3.5%. U.S. futures and European contracts dipped.

Oil prices slipped on Wednesday as rising fuel stockpiles in the U.S raised concerns; U.S. gasoline stockpiles rose by 7.1 million barrels in the week to Dec. 31, the American Petroleum Institute reported on Tuesday. Brent crude futures fell 0.2%, to $79.70 a barrel at the writing, while U.S. WTI crude futures fell 0.18%, to $76.70 a barrel. OPEC+ decided to raise its output target by 400,000 barrels per day from next month.

Gold was steady on Wednesday morning ahead of the minutes from the latest U.S. Federal Reserve meeting. Investors also weighed the possibility of an earlier-than-expected interest rate hike against surging numbers of COVID-19 cases globally. Gold spot inched up 0.02% to $1,815.07 an ounce.

Bitcoin traded near $46,000. Goldman Sachs Group Inc. predicts $100,000 is possible as the cryptocurrency continues to take market share from gold as a store of value.

What to watch this week:
• FOMC meeting minutes scheduled for release Wednesday
• Fed’s Bullard discusses the U.S. economy and monetary policy in an event on Thursday
• Fed’s Daly discusses monetary policy on a panel Friday
• ECB’s Schnabel speaks on a panel Saturday

Locally, the JSE gained 1.8% to a record closing high of 75,052 points. The Top-40 also reached its highest close ever, gaining 2.05%. Leading these gains were industrial metals, up 2.99% while resources and precious metals added 2.62% and 2.21%, respectively. Pharmaceutical manufacturer Aspen performed best on the day, jumping the most in five weeks, up 6.22% to R233.49.The rand took a hard hit on Tuesday, falling through R16 against the dollar. In early afternoon, it was trading at R16.05/$, its weakest level since mid-December. The dollar has been advancing against other currencies for a second day, as global investors looked ahead to Wednesday’s release of minutes from the Federal Reserve’s December policy meeting, hoping for insight into its plans amid surging inflation that has been forcing central banks to wind back pandemic stimulus and raise interest rates. Top-40 futures are -468points in the doldrums.

NEWS:
• South African Probe Makes Damning Findings Against Top Officials
• South Africa Reports 8,078 New Covid-19 Cases; Positivity 20.1%
• Investec: Covid-19 Unlikely to Weigh on S.Africa 2022 GDP Growth
• Momentum Sees S. Africa SARB Hiking Rates By 150 Bps Through ‘23
MEDIA SUMMARIES:
• Business Day: Government can’t be trusted with ‘ultimate responsibility’ to lead the fight against corruption — Zondo
• Daily Maverick: In court: Parliament fire suspect a ‘scapegoat for failures of the executive and legislature’ – lawyer
ECONOMIC DATA:
• 9:15am: Dec. Standard Bank South Africa PMI, prior 51.7

EU/UK/US
The pan-European Stoxx 600 index extended gains to firm up 0.82% at the close, hitting a fresh record along the way, helped in part by the US S&P 500 and Dow Jones Industrials indices which closed at all-time highs overnight. Travel & Leisure sector jumped 3.47%, alongside a 3.27% rise for Banks, as investors punted on hopes that further curbs may not be needed to deal with the Omicron Covid variant. The FTSE 100 ended the session up 1.63%. alongside the DAX gaining 0.83%. France’s Finance Minister, Le Maire, said that the country’s growth would be significantly higher this year than the government’s current forecast of 6.25%.

Wall Street closed mixed, with the Dow reaching a new all-time high, following the release of slightly weaker-than-expected economic data. The Institute for Supply Management’s factory sector purchasing managers’ index (PMI) slipped to 58.7 in December, from November’s print of 61.1. At the close, the Dow was up 0.59%, while the S&P 500 slipped 0.06%, with the Nasdaq Composite down 1.33%. Ford jumped 11.67% to reach a 21-year high after announcing plans to near-double Michigan production of its F150 Lightning pickup truck to 150,000 vehicles annually. On the downside, consumer electronics behemoth Apple was among the losers in the tech space, retreating 1.3% after it momentarily breached the $3trn market cap level during Monday’s session. FOMC meeting minutes scheduled for release later on Wednesday. Stock futures slipped after tech shares pulled back: DOW futures -0.20%, S&P500 futures -0.22%, Nasdaq futures -0.43%

ASIA
Japanese shares inched up on Wednesday, as gains in Toyota Motor and Sony Group were offset by weak performance of technology heavyweights. The Nikkei225 was up 0.03%. Australia’s S&P/ASX 200 dipped 0.3%. Hong Kong’s Hang Seng shed 0.85%, while the Shanghai Composite lost 0.8%.