Markets In Asia Retreat On Sino-US Tensions, Recession Jitters

02/08/2022 Shares in Asia pulled back on Tuesday amid escalating tensions between China and the US as House of Representatives Speaker Nancy Pelosi set to begin a visit to Taiwan against the objections of China. US National Security Spokesman Kirby has indicated that the Chinese Military might respond to Pelosi’s trip. MSCI Asia ex Japan index slid the most in three weeks, down 1.60% at the writing, with some of the steepest falls in Hong Kong, China and Taiwan. US and European futures were also in the red as July’s equity market rebound stumbled into August.

The month of August began with China, Europe and the U.S. reporting weakening factory activity, with that in the U.S. decelerating to its lowest level since August 2020. That sank crude oil, with Brent futures edging down below $100 mark – to $99.24 on Tuesday after losing almost $4 overnight. WTI light sweet futures also eased to $93.67, extending Monday’s almost $5 slide, down 0.70%. Gold jumped on safe haven demand, to $1,773 levels, alongside platinum and palladium bouncing about 0.30% each. Silver declined 1%

The JSE closed  down 0.42% on Monday, while the Top-40 lost 0.51%. Fears of a global economic slowdown are increasingly feeding into market perceptions. The rand hovered at its highest level against the dollar in July, boosted by moderation in global rate hike expectations. The Finance Minister said the central bank’s constitutional mandate to maintain price stability is sufficient to foster job creation, suggesting there’s no need for that directive to be expanded. The local market looks set to take cue from Asian counterparts as Top-40 futures (IG) are currently below  the watermark -600 points. Tencent in Hong Kong declined 2.50%.


Earnings Call:

  • Capital & Counties Properties (CAPC LN)
  • JSE Ltd. (JSE SJ)
  • Textainer Group Holdings Ltd. (TGH US)
  • Massmart Sees 26-Week Headline Loss Widening 41%-51%
  • Telkom 1Q Group Revenue Down 3.2% y/y to 10.3 Billion Rand
  • MTN GROUP LIMITED – MTN Ghana results released for the six-month period ended 30 June 2022
  • ROYAL BAFOKENG PLATINUM 1H REV. 8.17B RAND, -15% Y/Y

EU/UK/US

European stocks turned negative by the end of trading on Monday, amid weak manufacturing data and geopolitical tensions around China and Taiwan. Currently, futures in the continent are pointing downwards, indiction a softer start at the opening bell: DAX futures -0.43%, FTSE futures -0.31%, Euro Stoxx futures -0.49%. Russian central bank says economic downturn to deepen in Q3. German retail sales plummeted in June as consumers cut spending on non-essential goods to cope with record inflation.

Wall Street stocks retreated on Monday as Chinese data and comments from the Fed’s Neel Kashkari were in focus at the bell. Dow Jones index pulled back 0.14%, S&P500 declined 0.58%, while the Nasdaq gave up 0.18%. Uber will report its Q2 earnings ahead of the opening bell on Tuesday as it continues to recover from its dramatic fall during pandemic lockdowns. Molson Coors Beverage Co 2Q22 Tough Set-Up Gives Way to Better 2H Outlook. The three futures main benchmark are currently trading on the backfoot: Dow futures – 0.36%, S&P futures -0.47% and Nasdaq -0.45%

ASIA

Australian equities skid amid an uncertain outlook for commodity demand. Aussie dollar hovered near its highest since mid-June with the central bank widely expected to deliver a third consecutive 50 basis point interest rate hike later in the day. South Korea’s consumer inflation sped up to 24-year high in July, data showed on Tuesday. The Australian and South Korean equities benchmarks suffered losses of about 0.35% each, while the Nikkei225 tumbled 1.52%.

Chinese blue chips dropped 2.06% and Hong Kong’s Hang Seng’s lost 1.1%. Taiwan’s stock index slid 1.68%.