Global Equities Markets Dip, High U.S. Yields Tame Risk Appetite
Global equities markets indexes were down as elevated oil prices and U.S. Treasury yields kept global risk appetite constrained, although technology shares offered selective support.
On Wall Street, financials and industrials weakened as energy-driven inflation concerns lifted Treasury yields, leaving the Dow Jones down 0.86% and the S&P 500 0.25% lower, a stockbroking and portfolio management subsidiary of First National Bank (FNB) said in a brief.
Meanwhile, traders said the NASDAQ bucked the trend, closing 0.24% higher. Softer-than-expected core inflation nevertheless strengthened expectations that the Federal Reserve could refrain from raising rates in October.
FNB said that across the pond, the same yield and inflation pressures weighed on Europe, where the Euro Stoxx 50 fell 0.81% despite gains in technology, while banks, energy and pharmaceutical shares pulled the FTSE 100 down 0.29%.
Asian trading is more divergent. Stronger Chinese economic data and renewed buying support helped the Hang Seng Index close 0.37% higher.
The Nikkei 225 is currently surging 2.63%, even as the yen weakens, while the ASX 200 is trading 1.84% lower as housing and factory weakness compounds pressure from higher yields.
South African equities closed yesterday, and ultimately the third quarter, on a weaker footing, with the All-Share Index declining 0.85% and the Top 40 shedding 0.92%.
Industrials led the losses, falling 2.02%, largely dragged by a sharp decline in MTN, which dropped 7.2% after the company announced that a US court had denied its request to reconsider or immediately appeal an earlier ruling in ongoing US Anti-Terrorism Act litigation, allowing certain claims to proceed to the discovery phase.
Although the ruling was procedural and did not constitute a finding of wrongdoing or liability, the prospect of a lengthier legal process appeared to weigh on investor sentiment.
Financials also ended lower, down 0.84%, as elevated US Treasury yields fuelled concerns that the Federal Reserve may need to keep interest rates higher for longer, dampening risk appetite and weighing on emerging market-exposed stocks.
Resources outperformed the broader market, ending broadly flat as firmer gold prices provided support.
The Johannesburg Stock Exchange (JSE) is set for a firmer open this morning as rising global futures and gains across Asian markets offer scope for a rebound after the All Share and Top 40 closed lower.
The offshore lead is not uniformly supportive, however, with Tencent easing 0.23%, providing a modestly negative read-through for Naspers and Prosus.
On the resources side, a 1.33% decline in the S&P/ASX 300 Metals and Mining Index may cap gains in local miners, while persistent pressure on copper reinforces the subdued signal for diversified mining counters.
A stronger dollar and expectations of faster Japanese rate increases are also tempering risk appetite. Platinum remains under pressure, presenting a further headwind for JSE-listed PGM counters. NGX Loses N426bn as Investors Dump MTN, Stanbic IBTC, HBM
