Stocks Pause after S&P 500 hit another record high | US Congress tries again to reach stimulus deal

03/12/2020 Global stocks paused at all-time highs amid a muted start to equity trading in Asia, as investors assess renewed optimism over U.S. stimulus talks and vaccine approval. Treasury yields ticked up and the dollar remained near a more than two-year low. European and U.S. equity futures fluctuated after the S&P 500 closed at another record. Oil edged lower, with Tencent trading 2.2% higher in HK. The JSE Top 40 futures are indicating a better start, up 350 points or 0.65%, with the Rand slightly weaker -0.19% to 15.34 vs the USD.

Locally the FTSE/JSE Africa All-Share Index up 1.3% to 58,281, mostly supported by resources, with the platinum sector that gained 5.3%. Sasol also added 4.3% on the day, with banks and retailers that started fading throughout the day. The Rand was down 0.5% to 15.3285 per US$ as of 7:54 p.m, with the Yield on 10 year govt rand bonds that rose 0.4 bps to 9.008%.
South African President Cyril Ramaphosa faces his first no-confidence vote since his election in February 2018. The motion was brought by the opposition African Transformation Movement party

  • 9am: South Africa’s Government Employees Pension Fund holds a press conference to present its new CEO
  • 11am: South Africa’s Western Cape Premier Alan Winde to hold briefing on measures they’re taking to address the surge in coronavirus cases
  • Commission of Inquiry into state corruption continues
  • (FSR SJ): FirstRand Shareholders Reject Pay Policy, Question Bonuses
  • (KIO SJ): Kumba Cut to Hold at Investec; PT 520 rand

EARNINGS:
Alexander Forbes (AFH SJ), 1H
Oceana Group (OCE SJ), FY

ECONOMIC DATA:

  • 9:15am: Nov. Standard Bank South Africa PMI, est. 51.5, prior 51
  • 1pm: Oct. Electricity Production YoY, prior -3.1%
  • 1pm: Oct. Electricity Consumption YoY, prior -2.1%

CORPORATE EVENTS:

  • Annual general meetings: (RMH SJ), (RMI SJ), (TSG SJ)

EU/UK
European stocks closed mostly lower on Wednesday after a record rally last month, though U.K. shares got a boost following news of the country’s approval of a coronavirus vaccine. The pan-European Stoxx 600 provisionally closed 0.5% lower, with most sectors and major bourses in negative territory. Britain’s FTSE 100 index, however, climbed over 1.2%, with Germany’s DAX that ended down 0.52%, while France’s CAC closed the session flat. The U.K. on Wednesday became the first country in the world to authorize the Pfizer-BioNTech coronavirus vaccine, making it available from next week. Brexit discussions continue in a pivotal week after reports that EU chief negotiator Michel Barnier had told envoys that differences between the two sides remain and a deal is hanging in the balance. Germany’s retail sales rebounded in October, before the country re-entered a nationwide lockdown, while Italy’s unemployment rate climbed to 9.8% in October from an upwardly revised 9.7% in September. London Stock Exchange’s share price rose over 9% after reports that the company was set to win EU antitrust approval for its $27 billion acquisition of data analytics firm Refinitiv. Meanwhile, G4S jumped more than 7% after Canada’s GardaWorld increased its takeover bid for the British security firm to £3.68 billion ($4.92 billion).
US
The S&P 500 rose slightly on Wednesday, eking out another record closing high, as traders digested the latest developments surrounding a new round of U.S. fiscal stimulus negotiations. The broad market index ended the day up 0.2% at 3,669. The Dow Jones Industrial Average climbed 59 points, or 0.2%. The Nasdaq Composite dipped 0.1% to 12,349. It was the second straight record close for the S&P 500. The Nasdaq also reached an all-time closing high in the previous session. Energy and financials were the best-performing sectors in the S&P 500, advancing 3.2% and 1.1%, respectively. Boeing led the Dow higher with a gain of 5.1%. However, Boeing’s pop was slightly offset by an 8.5% drop in Salesforce after the cloud company confirmed its acquisition of messaging platform Slack for $27.7 billion. House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer said in a joint statement Wednesday that the bipartisan bill unveiled on Tuesday should be used as “basis for immediate bipartisan, bicameral negotiations.” Those comments lifted the market off their lows. On the data front, private payrolls rose by 307,000 in November, lower than estimates of 475,000. The number was also the lowest since July.
ASIA
Stocks in Asia-Pacific were little changed in Thursday trade as investors reacted to the release of a private survey on China’s services sector activity in November. Mainland Chinese stocks were mixed by the afternoon, with the Shanghai composite down about 0.1% while the Shenzhen component gained 0.14%. In Hong Kong, the Hang Seng index advanced 0.56%. The Caixin/Markit services Purchasing Managers’ Index for November came in at 57.8, rising from October’s reading of 56.8. In Japan, the Nikkei 225 was flat, while South Korea’s Kospi gained 0.18%. Over in Australia, the S&P/ASX 200 rose 0.38%. Australia’s seasonally adjusted balance of goods and services saw a surplus of 7.456 billion Australian dollars in October (approx. $5.52 billion), according to the country’s Bureau of Statistics. That was higher than an expected surplus of 5.8 billion Australian dollars in a Reuters poll. MSCI’s broadest index of Asia-Pacific shares outside Japan traded 0.39% higher.
COMMODITIES
Oil was steady before an OPEC+ meeting as key powerbrokers in the alliance haggle over output policy after failed talks earlier in the week. Futures traded near $45 a barrel in New York after rising 1.6% on Wednesday. Discussions are now focusing on proposals for a gradual easing of production cuts over several months, said a delegate, following talks between Russia, Saudi Arabia and the United Arab Emirates.
Gold rose to the highest level in more than a week as investors weighed the outlook for stimulus in the U.S. and a weaker dollar, against vaccine breakthroughs. Spot gold advanced as much as 0.3% to $1,837.36 an ounce, the highest intraday level since Nov. 24, and was at $1,835.94 at 11:47 a.m. in Singapore. Silver fell 0.2%, palladium slipped 0.1%, while platinum was little changed.
Copper rose 0.2% to $7,687 a ton, trading close to the highest in more than seven years as optimism around coronavirus vaccines and U.S. stimulus talks bolsters the demand outlook. Aluminum and zinc also advanced.
Iron ore futures held near a seven-year high as investors assessed the slower-than-expected output recovery from Vale SA and steel consumption in China. Vale now expects to produce between 300 million tons and 305 million tons of the steelmaking raw material this year compared with a previous target of 310 million tons. Futures are up 0.5% to $134 a ton, after surging as much as 3.2% on Wednesday.