U.S. and European stock futures positive along with most Asian equities

28/08/2020 We are indicating a slightly better start, with U.S. and European stock futures positive along with most Asian equities. The S&P 500 yesterday reached a fresh all-time high, after Jerome Powell said the Fed will seek inflation that averages 2% over time, a step that implies allowing for periods of overshoots. The JSE top 40 futures are up 202 points or 0.39%, we could see some support from banks and retailers as the rand recovered, trading below 1700 vs the USD, but Naspers and Prosus could cap gains with Tencent down 1.6% in HK.
The administrators of Comair Ltd. Are scheduled to publish a business-rescue plan for the airline, which will be put to a creditors’ vote on Sept. 11.

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EARNINGS:

  • Northam Platinum Full Year Adjusted Net Misses Estimates
    *FY NORMALIZED HEADLINE EPS 6.763 RAND
    *WON’T PAY DIV FOR FINL YR 2020
    *FY ADJ NET 3.4B RAND, EST. 3.70B
    *FY OPER PROFIT 5.3B RAND
    *FY REV. 17.8B RAND

ECONOMIC DATA

  • 2pm: (SA) July Monthly Budget Balance, est. -116.8b, prior -22.3b

MARKETS
The FTSE/JSE Africa All-Share Index closed up 0.5% to 56,869, mostly supported by gains in Naspers and Prosus as well as Bidcorp. Sibanye Stillwater also contributed to the gains after announcing that it will resume paying dividends after a three-year break. The Rand was down 0.8% to 17.00 vs the USD, with the Yield on 10 year govt rand bonds that fell 0.3 bps to 9.309%.

EU/UK
European stocks closed lower on Thursday, losing recent positive momentum, after a key speech from Federal Reserve Chairman Jerome Powell. The pan-European Stoxx 600 index ended the session down by around 0.6%, with almost all sectors and all major bourses dipping into negative territory. Global investors monitored a pivotal speech stateside from the Fed’s Powell, who outlined historic changes to the central bank’s monetary policy strategy that would see it allow inflation to run hotter than normal to support the labor market and broader economy. In London the FTSE 100 lost 0.75%, the German Dax shed 0.71%, with the Paris CAC 40 giving up 0.64%. Looking at individual stocks, shares of advertising giant WPP were up over 4% after the company posted a lower-than-expected fall in underlying net sales and resumed its dividend. And French conglomerate Bouygues climbed over 1% after reporting a lower-than-expected operating loss in its first-half results. Meanwhile, shares of engines maker Rolls Royce fell about 1% after it posted a £3.2 billion ($4.2 billion) pretax loss for the first half of the year, said it planned asset sales and announced the departure of its CFO.
U.S.
The Dow Jones and S&P 500 rose last night after the Federal Reserve unveiled a new framework that could keep interest rates lower for a longer period of time. The 30-stock Dow climbed 160 points, or 0.6%, to close at 28,492.27. Earlier in the session, the average turned positive for 2020. The S&P 500 gained 0.2% to close at 3,484.55 and briefly topped 3,500 for the first time. The Nasdaq Composite slid 0.3% to 11,625.34. Stocks got a boost to start the session after Fed Chairman Jerome Powell said the central bank formally agreed to a policy of “average inflation targeting.” In other words, the central bank will let inflation run “moderately” above its 2% goal for “some time.” The central bank has for years tried to keep inflation at 2%, a rate of price increase that policymakers consider both manageable and indicative of a healthy economy. But ever since the financial crisis, inflation in the U.S. has more often than not lagged the Fed’s target. Powell also hinted that unemployment data can stay lower for longer before the Fed starts thinking about raising rates. This led to a decline in short-term yields and gains in long-term yields.
ASIA
Japanese stocks tumbled and the yen rose after a report that Prime Minister Shinzo Abe will resign due to health reasons. Meanwhile, yield curves steepened in Asia along with U.S. Treasuries after Powell said the Fed will seek inflation that averages 2% over time. Japan’s benchmark Topix Index fell as much as 1.9% before paring losses, with the rest of Asia steady to lower. The Nikkei is down 1.8%, the Hang Seng up 1.2% (Tencent -1.25%) and the Shanghai 0.95% higher. In OZ the ASX 200 was down 0.82%, with the metals & mining index down 1.89%.
COMMODITIES
Oil edged lower — but was still headed for a fourth weekly gain — after Hurricane Laura swept through Louisiana and Texas without appearing to inflict major damage on the region’s energy infrastructure. Futures in New York dipped below $43 a barrel after closing down 0.8% on Thursday. Laura came ashore as one of the most powerful hurricanes to ever hit Louisiana but has since weakened to a tropical storm. While it knocked out power to hundreds of thousands of people and impacted plants that produce chemicals and liquefied natural gas, southeast Texas ports and crude facilities — including the largest U.S. refinery – likely avoided the worst of it.
Gold climbed after earlier declining more than 1%, settling around $1942 a pound, as investors weighed the impact of the Federal Reserve’s new approach to setting U.S. monetary policy, with a more relaxed stance on inflation.