Markets set to rise amid coronavirus vaccine hopes

02/07/2020

The JSE All Share ended the day down 1.06% and the ZAR strengthened nearly 2% as a much better than expected PMI number was released. The Absa purchasing managers’ index reached its highest level since August 2013, showing that conditions in the manufacturing sector reached a multiyear high in June, however, the bank cautioned that this does not mean actual production has bounced back. We should see a positive start to the day as Asian markets are firmer on vaccine news and Tencent trades up 2.7% after the Hong Kong holiday yesterday.

News that a vaccine candidate being developed by Pfizer and BioNTech shows potential. An early-stage human trial of one of four potential coronavirus vaccines it’s developing showed the drug created neutralizing antibodies.

Mineral Resources and Energy Minister Gwede Mantashe speaks about the future of the mining industry in webinar that also includes Anglo American Platinum’s Norman Mbazima.
• Steinhoff Puts Share Sale of Poundland Owner Pepco on Hold.
• S. Africa Regulator Approves Investec Bank-Omwieco Transaction.
• Sasol to Sell Interest in Nigeria Escravos GTL Plant to Chevron.
• 11am: National Energy Regulator press briefing
ECONOMIC DATA:
• 11am: 1Q current account as a % GDP, est. -0.65%, prior -1.3%
• 11am: 1Q current account balance, est. -30.6b, prior -68b
• 1pm: May electricity production YoY, prior -22.8%
• 1pm: May electricity consumption YoY, prior -23.3%
European stocks are expected to open higher as global markets get a boost from news surrounding the development of a potential coronavirus vaccine. London’s FTSE is seen opening 49 points higher at 6,203, the DAX is seen 120 points higher at 12,362, the CAC 40 is seen 51 points higher at 4,971 and Italy’s FTSE MIB is seen 190 points higher at 19,405, according to IG.
In the US, the DOW closed down 78 points, the S&P gained 15 points and the Nasdaq hit yet another all- time high up 96 points. Though the Dow lagged the modest loss, all three major indexes are on track for sizable weekly gains. The S&P 500, Dow and Nasdaq are up 3.5%, 2.8% and 4%, respectively, since Friday’s close. Futures this morning have turned positive with the DOW + 35 points and S&P + 5 points. Focus now shifts to June U.S. employment data due later in the day.

Asian trades positive this morning on the vaccine news and Hong Kong opens positive after a holiday despite protests, the Hang Seng is up 1.54%, Tencent up 2.70%. Meanwhile, Australia’s S&P/ASX 200 jumped 1.5%. Trade surplus for May came in at 8.025 billion Australian dollars ($5.55 billion), that was below expectations of a trade surplus of 9 billion Australian dollars in a Reuters poll. Mainland Chinese stocks also saw gains, with the Shanghai composite rising 1.16% and the Shenzhen component adding 0.86%. Overall, the MSCI Asia ex-Japan index gained 1.19%.
Gold prices are softer, drifting off a near eight-year high hit yesteday, as strong U.S. data and hopes for a potential COVID-19 vaccine dented safe-haven sentiment. Golds trading at $ 1768.
Oil prices have bounced off earlier lows after the United States recorded its biggest one-day spike in coronavirus cases and California re-imposed some lockdown measures, stoking worries a resurgence in COVID-19 cases will stall a recovery in fuel demand. All eyes will be on driving activity in the United States over the upcoming July 4th holiday weekend and how quickly U.S. producers revive shut-in production, analysts said. Brent $ 42.19, WTI $ 39.94.