Asia Stocks Gain With Bonds Steady; Oil Climbs

23/02/2021 Asian stocks advanced with U.S. equity futures this morning as investors focused on expectations for faster growth, and bond yields and commodities stabilized after their run-up on inflation concerns. The dollar dipped. Stocks are outperforming in Hong Kong and Australia, with Japan shut for a holiday. S&P 500 contracts climbed after fluctuating earlier. The index fell for a fifth day, its longest losing streak in a year, with the Dow managing to eke out small gains. The Nasdaq 100 tumbled more than 2% as investors questioned the appeal of more expensive equities. The Bloomberg Commodity Spot Index, which tracks price movements for 23 raw materials, earlier rose to its highest since March 2013. Brent oil consolidated above $65 a barrel as Goldman Sachs Group Inc. predicted prices could top $70 in coming months. WTI crude rose toward $63 a barrel. Tencent trades 0.28% lower in HK erasing earlier gains, with the JSE Top 40 futures indicating a better start, up 303 points or 0.0.49%. The Rand is firm at 14.63 vs the USD.

Locally the FTSE/JSE Africa All-Share Index closed down 0.2% to 67,362, mostly weighed down by Prosus and Naspers that shed 3.8% and 2.4% respectively, following a selloff in its tech peers globally. Miners however had a good day again with the platinum sector that gained 2.3% and golds also ended up 1.9%. The property and retail sector both ended the session in the black, surging 1.7% and 1.4% respectively. The Rand was down 0.1% to 14.71 per US$, with the Yield on 10-year govt rand bonds that rose 9.50 bps to 8.99 bps.
Data will probably show South Africa’s official unemployment rate remained above 30% in the fourth quarter. The median estimate of five economists in a Bloomberg survey was 31.5%.

  • NEWS:
  • Bank Dividend Reprieve Comes With Warning in South Africa
  • South African Panel Wants Zuma Jailed for Contempt, News24 Says
  • Biovac Plans to Become a Vaccine Maker for Underserved Africa
  • South Africa’s Mboweni Must Revive Economy While Trimming Budget
  • Super Group Jumps to 13-Month High After 1H Profit Increases
  • South African REITS Rise on Redefine’s Update, ‘Relief’ Rally
  • Grindrod Says Loss May Widen; Shares Fall Most in 5 Months
  • Sasol Erases Gain; Analyst Says News May Have Been Priced In
  • Johannesburg Platinum Stocks Chase 2008 High as Rand Slump Helps
  • Glencore Raised to Overweight at JPMorgan on Metals Supercycle
  • Anglo Platinum to Increase Output on Bullish Demand Outlook
  • Transaction Capital Rated New Buy at Investec; PT 29.60 rand
  • De Beers Hikes Diamond Prices Again as Revival Keeps Going
  • AngloGold Boosts Dividend More Than Fivefold as Prices Soar

EARNINGS:

  • Bid Corp. (BID SJ)
  • Harmony Gold Mining Co. (HAR SJ)
  • Imperial Logistics Ltd. (IPL SJ)
  • Kumba Iron Ore Ltd. (KIO SJ)
  • Motus Holdings Ltd. (MTH SJ)

ECONOMIC DATA:

  • 9am: Dec. Leading Indicator, est. 110.0, prior 114.5

GOVERNMENT:

  • Eskom to brief lawmakers on its annual report
  • Pre-briefing by Parliamentary Budget Office on 2021 budget
  • Tourism Business Council of South Africa to inform lawmakers on state of industry
  • Lawmakers to debate vaccine rollout plan at plenary session of National Assembly

BOND SALES/PURCHASES:

  • 12pm: South Africa to sell 2.2 billion rand of 8.5% 2037 bonds
  • 12pm: South Africa to sell 2.2 billion rand of 8.75% 2044 bonds
  • 12pm: South Africa to sell 2.2 billion rand of 8.25% 2032 bonds

CORPORATE EVENTS:

  • Annual General Meeting: RDF SJ
  • Other Event: OCE SJ
  • Earnings Calls: HAR SJ, IPL SJ

EU/UK
European stocks closed lower on Monday amid cautious trade in global markets. The pan-European Stoxx 600 finished the session down by over 0.4%, with tech stocks shedding 1.9% to lead losses, while the travel and leisure sector bucked the downward trend to surge 4.3%. Developments surrounding the pandemic and vaccine rollout remain in focus. The U.K. on Monday unveiled how it plans to lift lockdown measures gradually in the coming months, as its vaccination rollout maintains its good pace. On the data front, Germany’s Ifo Institute business climate index rose in February, with sentiment in Europe’s largest economy improving by more than expected on both current conditions and expectations. In terms of individual share price movement, Anglo-German travel operator Tui climbed more than 5% to the top of the Stoxx 600, leading a broad rally for travel stocks as the U.K. outlined its emergence from lockdown and several airlines amended their policies. At the bottom of the index, German car battery manufacturer Varta dropped more than 10.7%, continuing a downward trend since the company’s earnings report last week, after Berenberg downgraded the stock to “hold” from “buy.” G4S shares fell 9.8% after Canada’s GardaWorld said it would not raise its takeover bid for the British security firm.
US
Steep losses in technology shares dragged down the S&P 500 on Monday as a continuous rise in bond yields dented the appetite for growth stocks. Meanwhile, investors piled into economically sensitive names to bet on a comeback. The broad equity benchmark lost 0.8% to 3,876 in volatile trading, falling for a fifth straight session amid the weakness in tech and consumer discretionary. The Nasdaq Composite fell 2.5% to 13,533 as Tesla shares slid 8.6%. Big Tech stocks came under pressure with Apple, Amazon and Microsoft all dropping at least 2%. The Dow Jones Industrial Average reversed a 200-point loss to close 27.37 points higher, or 0.1%, at 31,521. A handful of economic comeback plays boosted the blue-chip benchmark. Disney jumped 4.4%, while industrial giant Caterpillar and chemicals company Dow Inc. both climbed more than 3.5%. American Express and Chevron gained 3.2% and 2.7%, respectively.
ASIA
Shares in Asia-Pacific were mixed in Tuesday trade, as investors monitored technology stocks regionally after their counterparts declined overnight on Wall Street. Mainland Chinese stocks were mixed by the afternoon as the Shanghai composite gained 0.34% while the Shenzhen component dipped 0.53%. Hong Kong’s Hang Seng index gained 1.48%. South Korea’s Kospi declined 0.29%. Over in Australia, the S&P/ASX 200 edged 0.49% higher. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.37%. On the earnings front, HSBC said Tuesday its reported profit before tax for 2020 fell 34% from a year ago to $8.8 billion. It also declared an interim dividend of 15 cents per share. The bank’s profit was above analyst expectations of $8.3 billion for the whole of last year, based on estimates compiled by the London-headquartered bank. Shares of HSBC in Hong Kong were up more than 3% by Tuesday afternoon. Markets in Japan are closed on Tuesday for a holiday.
COMMODITIES
Gold rose for a third straight session as investors awaited testimony from Federal Reserve Chair Jerome Powell, and weighed the prospect of a large U.S. stimulus package moving closer to approval. Spot gold advanced 0.2% to $1,812, after rising 1.9% over two days. Silver, platinum and palladium all fell.
Oil surged toward $63 a barrel with investment banks and traders predicting the market will tighten further and push prices higher. Futures in New York jumped 1.6% on Tuesday after climbing more than 4% in the previous session.
Iron ore retreated from its highest since December, halting this month’s burst higher, as investor enthusiasm eased amid lingering concerns over rising supplies. Iron ore in Singapore fell 1.1% to $169.60 a ton by 11:57 a.m. local time. Prices touched $174.05 on Monday, nearing the highest since contracts started trading in 2013.
Copper traded near the highest level in over nine years as base metal prices extended gains spurred by the global recovery from the pandemic and a weakening dollar. Copper rose as much as 1.7% to $9,254 a ton on the London Metal Exchange before trading at $9,226 as of 11:02 a.m. in Shanghai. Other metals also rose, led by nickel, which gained 1.7% to $19,825, heading for the highest close since 2014.
Some key events to watch this week:

  • Fed Chair Jerome Powell delivers the central bank’s semi- annual monetary policy report to the Senate Banking Committee on Tuesday.
  • EIA crude oil inventory report is out Wednesday.
  • Finance ministers and central bankers from the Group of 20 will meet virtually Friday. U.S. Treasury Secretary Janet Yellen will be among the attendees.