China Stocks Gain, Gold Slips, Crude Oil Advances

17/08/2020 The Shanghai Composite climbed more than 2% higher on Monday after the People’s Bank of China boosted liquidity in the financial system to support banks. Hong Kong was also tagged along, rising almost 1.50%, with Tencent gaining 0.89%. Equities in Japan and Australia were lower. Gold fell 0.05% @ $1944.11, building on last week’s slide, while Brent crude advance 0.61% @ $45.13. The local currency is steady at 17.3550 to the dollar, having to recover 1.89% for last week. Yield on 10 year govt rand bonds fell 7.5 bps to 9.188%

On Friday the JSE lost 0.6% to 57,077.48 points and the Top 40 0.65%. Platinum miners jumped 3.49%, as the price of the metal remains above $950/oz, having breached $1,000 since February earlier this week.

• South Africa eases Covid-19 lockdown and moves to alert level 2 at midnight on Monday.
• South Africa Lift Its Alcohol Ban as Coronavirus Crisis Eases
• Eskom says power system ‘severely constrained’ for week ahead
• Electricity supply looks vulnerable until about November
• 11:15am: National Treasury and DBSA enter into a MoA to establish and manage the R100bn Infrastructure Fund.
• 5pm: BBC and BUSA host webinar with business leaders and ANC officials

EQUITY PREVIEW:
(FFA SJ): Fortress Raised to Overweight at ABSA Securities; PT 14.90 rand
(GRT SJ): Growthpoint Raised to Equal-Weight at ABSA Securities
(HYP SJ): Hyprop Cut to Underweight at ABSA Securities; PT 19.70 rand
(VKE SJ): Vukile Property Fund Cut to Underweight at ABSA Securities
(MTM SJ): MOMENTUM METROPOLITAN REPORTS ALERT ON CYBER ATTACK, MOMENTUM METROPOLITAN SAYS THIRD PARTY UNLAWFULLY ACCESSED DATA

EARNINGS: SASOL FY EBIT LOSS 111.0B RAND VS. PROFIT 9.7B RAND Y/Y, SASOL TO CONTINUE W/ SUSPENSION OF DIVIDENDS

THE JSE/ALL-SHARE FLAT FOR THE YEAR

EU/UK
European stock markets closed firmly in the red on Friday, with travel shares under pressure as the UK added more countries to its quarantine list. Panicked travellers scrambled to return home from France, the Netherlands, Malta and Monaco ahead of Saturday before a 14-day quarantine rule took effect. The pan-European Stoxx 600 index finished the week down 1.2%, with Paris’ CAC-40 dropping 1.58%, alongside the DAX giving up 0.71%, while the FTSE100 lost 1.55%.

US
The Dow opened 50 points lower on Friday as lawmakers in Washington still failed to reach an agreement on a new Covid-19 stimulus bill. Also weighing on sentiment was a report that revealed US retail sales had come in less than expected in July; retail sales rose 1.2% last month, missing an average forecast of 1.9% and falling well below the growth rate of 8.4% recorded in June. Weak data out of China and a spike in new Covid-19 cases in France did not help with the mood of the day either. At the close: the Dow marginally gained 0.12%, while the S&P500 was flat 0.02 and the Nasdaq gave up 0.21% for the day.

US stock index futures point to a higher start to the week: Dow futures up 103 points, or 0.37%, with the S&P500 futures up 0.29% and the Nasdaq advancing 0.46%.
Here are some key events coming up:
• Earnings include Alibaba, JD.com, Walmart, Home Depot, BHP Group, Nvidia and Qantas.
• The EIA’s crude oil inventory report comes out Wednesday.
• U.S. jobless claims for the week ended Aug. 15 are due Thursday.
• China’s loan prime rate is due Thursday.
• On Friday come euro-area PMIs.

ASIA
The Nikkei sank 0.62% while other Asian markets gained Monday after Japan reported a record economic contraction as the coronavirus pandemic weighed on retailing, investment and exports. Investors in Asia looked ahead to central bank meetings this week in China, Indonesia and the Philippines. MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.5% to 565.74, moving nearer to the January top of 574.52. Economic data showed Japan’s economy shrank 27.8% from a year earlier in the three months ending in June. Bigger than the country’s deepest decline during 2008-09 financial crisis. The Shanghai Composite Index rose 2.63% and Hong Kong’s Hang Seng gained 1.53%, while Sydney’s ASX 200 shed 0.69%

COMMODITIES
China’s plans to ship in large volumes of U.S. crude in August and September. Brent crude added 0.7% to $45.10 a barrel, while U.S. WTI was up 34 cents, or 0.8%, to $42.35 a barrel. Chinese state-owned oil firms have tentatively booked tankers to transport at least 20 million barrels of U.S. crude for August and September, as China ramped up energy and farm purchases ahead of a review of the Sino-U.S. trade deal.

Wishing you all a good week ahead 😉