Dow drops more than 900 points | Germany and France brace for lockdowns

29/10/2020 Asian stocks are lower this morning, with losses more modest than the rest of the globe, after shares tumbled in the U.S. and Europe, as rising coronavirus infections and tougher lockdowns added to worries about the economic hit from the pandemic. U.S. and European futures are rebounding from the worst of the overnight declines, with the S&P 500 contracts climbing about 1% after the benchmark lost 3.5% yesterday — its biggest drop since June. The dollar gave back some of its overnight advance and 10-year Treasury yields held at 0.78%. Oil was steady after tumbling more than 5% on concern rising infections will sap demand. Tencent trades 1.4% higher in HK. The JSE Top 40 futures are indicating a better start, up 370 points, or 0.75%.

Locally the FTSE/JSE Africa All-Share Index followed global markets lower, closing down 3.3% to 52,308, with losses recorded across all sectors. The platinum sector got hit the most, down 7.3%, with financials, retailers and property shedding 4.5%, 4.7% and 3.9% respectively, The Gold sector also lost 3.5% with the only resistance seen in Aspen up 1.6% and Prosus and Naspers that were pretty flat on the day. The Rand weakened 1.2% to 16.40 vs the USD after Finance Minister Tito Mboweni’s budget update yesterday, with the Yield on 10 year govt rand bonds that rose 6.7 bps to 9.303%.
South African Finance Minister Tito Mboweni will brief a group of lawmakers about the budget update he delivered yesterday, which included a civil-servant pay freeze and the reduction of other spending to curb escalating debt, with Transport Minister Fikile Mbalula that will start discussions with the taxi industry about potential reforms and regulations.

  • South Africa Risks Union Ire With Pay Freeze to Tame Debt
  • South Africa Bails Out Airline After Investor Search Fails
  • South Africa Defends State Airline Bailout As It Seeks Partners
  • (SBK SJ): Top African Bank Goes ‘Customer-Centric’ in Executive Revamp
  • South African Stocks Dive Most in Seven Months Amid a global Selloff, and after the release of the Budget
  • (SOL SJ) Sasol Extends Slump; Independent Says Sales Missed Expectations

EARNINGS:

  • Sibyane Stillwater, 3Q, (SSW SJ)
  • Afrimat, 1H (AFT SJ)
  • MiX Telematics, 1H (MIX SJ)

ECONOMIC DATA:
Money Supply M3 Rises 9.48% YoY, est. 10.95%, prior 10.86%
Private Sector Credit Rises 3.12% YoY, est. 4.1%, prior 3.87%

  • 11:30am: Sept. PPI YoY, est. 2.45%, prior 2.4%
  • 11:30am: Sept. PPI MoM, est. 0.3%, prior 0.7%

EU/UK
The pan-European Stoxx 600 closed down by 3.1% provisionally, suffering its worst one-day drop since late September. Germany’s DAX led the sell-off, down 4.4%, while France’s CAC tumbled 3.7%, with London’s FTSE 100 erasing 2.5%. It comes after reports that both Germany and France are set to announce fresh lockdown measures. German Chancellor Angela Merkel is meeting with state leaders to discuss closing restaurants and bars but keeping schools and nurseries open, while French President Emmanuel Macron will give a TV address this evening to announce further curbs on movement. On the earnings front, Deutsche Bank reported a net profit of 182 million euros ($214 million) for the third quarter, surpassing expectations to swing back to profit, with its shares that closed marginally lower. French IT consultancy Sopra Steria dropped more than 13% to the bottom of the Stoxx 600 after a weak third-quarter trading update. At the top of the European blue chip index, British airplane engine manufacturer Rolls-Royce soared over 13% after investors backed a funding round to help the company weather the pandemic.
US
U.S. stocks fell sharply last night, amid concerns over the latest increase in coronavirus infections and its potential impact on the global economy. The Dow Jones dropped 943 points, or 3.4%, to 26,519, posting its fourth straight negative session. The S&P 500 slid 3.5%, or 119 points, to 3,271, while the Nasdaq Composite fell 3.7%, or 426 points, to 11,004. The Dow and the S&P 500 both suffered their worst day since June 11. Stocks that would be hurt the most by lockdowns or a slowdown in the economy reopening led the declines. Shares of United Airlines fell 4.6%. Royal Caribbean shares lost 7.4%, while Norwegian Cruise Line and Carnival dropped 9.1% and 10.6%, respectively. The Cboe Volatility Index (VIX), known on Wall Street as the market’s “fear gauge,” jumped above 40 and hit its highest level since June 15.
ASIA
Losses are more modest across Asia than in the American session, with shares in South Korea and Australia faring worst, while Japan erased earlier declines. In China, nearly 1,000 firms are releasing third-quarter earnings on
Thursday, with traders looking to see if the results confirm the nation’s accelerating recovery. The yen held a small decline after the Bank of Japan kept its key interest rate and asset purchases unchanged
COMMODITIES
Oil held near a four-week low after a surge in European virus cases and a bigger-than-expected jump in American crude stockpiles pushed prices down by the most in almost two months in the previous session. Futures in New York were steady near $37 a barrel after plunging 5.5% Wednesday.

Gold steadied near the lowest close in more than a month as a surge in coronavirus infections and losses in global equities boosted the dollar, undercutting the metal’s appeal as a haven asset. Spot gold rose 0.2% to $1,880.60 an ounce, after tumbling 1.6% on Wednesday to the lowest close since Sept. 25. Silver climbed 0.2%, platinum was little changed and palladium advanced 0.7%.