Democrats Win US Senate; Asia Stocks Up

07/01/2020 Asian equites markets advanced with U.S. futures after Democrats took control of the Senate following key elections. Democrats won two key Georgia runoffs, boosting speculation of spending to revive growth. The Dow, S&P 500 and Nasdaq 100 futures also climbed. Oil edged up and gold was little changed. The dollar was steady. Hong Kong underperformed, weighed down by declines in Alibaba Group and Tencent Holdings, down 4% currently, after reports that the Trump administration may bar investments in China’s two most valuable companies.

The JSE rose 1.54% to 61,857.42 points and the Top-40 1.61%. Resources jumped 3.96%, platinums 0.57%, banks 0.85% and financials 0.32%. Sasol led gains, rising 8.95% to R143.82. The rand remained weaker, trading above R15/$ for a second consecutive day as surging Covid-19 cases and deaths in SA remain a concern.

COVID
• SA recorded 14,410 new Covid-19 cases, taking the national total to 1,127,759.
• South Africa records 844 more deaths and 21 832 new cases in ‘grim milestone’, NEWS24.
• Health Minister Zweli Mkhize will brief lawmakers on the coronavirus pandemic as government officials called for stricter measures to curb infections.
NEWS:
• Moderna Gains EU Approval; Britain Cancels Exams: Virus Update
• AB-InBev Unit to Challenge South African Alcohol Ban in Court
• Citigroup Wrong-Footed as Rand Shows Why It’s ‘The Rattler’
EQUITY PREVIEW:
• South African Stocks Surge to Record, Shrugging Off Pandemic
ECONOMIC DATA:
• 1pm: Nov. electricity consumption y/y, prior -2.5%; electricity production y/y, prior -2.8%

EU/UK/US
European markets closed firmer as investors bet that a Democrat-controlled Senate in the US would lead to further stimulus – oil and banking stocks lead the charge. The European Stoxx 600 index was up 1.36%, while Britain’s FTSE 100 shrugged off the latest national lockdown and soared 3.47%. Standard Chartered up 9.38%, Barclays ahead 8.27%, HSBC rising 9.92%. BP and Shell also rallied, gaining 6.35% and 6.95% respectively.

Wall Street finished on a mixed note: the Dow was up 1.44%, the S&P 500 added 0.57%, while the Nasdaq was 0.61% weaker – some investors fear that Democrat-controlled Senate could bring tougher antitrust scrutiny to the technology giants. U.S futures: Dow +0.8%, S&P 500 + 0.47%, Nasdaq 0.65%.

ASIA/COMMODITIES
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.8% . Australia’s miner-and-bank heavy ASX200 1.60% firmer, Japan’s Nikkei rose 1.35%, while Hong Kong is down 0.56%.

OPEC’s top producer, the Saudis, surprised markets with a unilateral decision to reduce its production by 1.0m barrels a day, sending Brent oil bouncing past $54 mark. Currently the Brent futures are up 0.55% at 54.61.