Asia Stocks Track U.S. Gains as Dow hits another record; Bond Yields Lower

16/03/2021 Asian stocks rose this morning after optimism about the economic recovery drove U.S. shares to a record. Treasury yields held declines as traders await the Federal Reserve policy decision for clues about the outlook. MSCI Inc.’s Asia-Pacific gauge climbed amid modest gains in Japan and China, where investors are watching for a possible broader crackdown on the internet sector. The S&P 500 advanced for a fifth session, led by utilities and real estate. Apple Inc. and Tesla Inc. helped push up the Nasdaq 100. S&P 500 contracts fluctuated, while Nasdaq 100 and European futures are pointing higher. Australian 10-year bond yields dropped, following the pullback in benchmark U.S. rates from last week’s highs. Oil slipped and the dollar was steady. Bitcoin briefly slid below $54,000 from a weekend peak above $61,000.. Tencent are trading flat in HK. We in for a positive start, with the JSE Top 40 futures up 202 points or 0.32%. The Rand remains firm at 14.86 vs the USD.

The FTSE/JSE Africa All-Share Index closed down 0.9% to 67,566, mostly weighed down by the banking and resource sectors that shed 1.88% and 1.43% respectively. Heavyweights Naspers and Prosus were also a drag as tech stocks globally came under pressure. On the positive side Mr Price gained 4.07% after announcing in a surprise deal to buy kitchenware retailer Yuppichef, with Vodacom also gaining a healthy 6.5%. The Rand was up 0.3% to 14.91 per US$, with the Yield on 10-year govt rand bonds that fell 6.70 bps to 9.28 bps.
South African lawmakers consider an independent panel’s recommendations on whether to establish an inquiry into graft ombudsman, Busisiwe Mkhwebane’s fitness to remain in office. The probe is likely to be the precursor to a vote on whether she should be removed on the grounds of misconduct, incapacity or incompetence.

  • Gold Gains on Bets Fed Will Reaffirm Low-Rates Policy This Week
  • Eskom Warns of High Risk of Power Cuts as it Fixes Faulty Plants
  • South Africa Students Plan to Shut Universities Over Funding
  • Massmart Kept at Outperform as Avior Sees Profit Margin Rising
  • Tyme Bank Appoints David Pfaff as CFO, South Africa CEO
  • Mr Price to Buy South Africa’s Yuppiechef in Cash Deal
  • Exxaro Sees FY Ebitda Rising as Much as 27% on Higher Exports
  • Absa Breaks With South African Rivals on Dividends – For Now
  • MEDIA SUMMARIES:
  • News24: JUST IN | Zuma sought to ‘exploit’ status as ex- president, Zondo commission tells ConCourt
  • Daily Maverick: Competition Commission steps carefully into the fast-growing online retail space
  • Daily Maverick: Carl Niehaus tables radical economic transformation plan ahead of Ace Magashule’s campaign for ANC president
  • Business Day.za: SA hit by more than 800 hours of load- shedding in 2020
  • Moneyweb: Brazil, South Africa finances at risk from domestic debt market volatility – S&P

EARNINGS:

  • Shoprite Holdings Ltd. (SHP SJ)

ECONOMIC DATA:

  • 10am: 1Q BER Consumer Confidence, est. -10, prior -12

BOND SALES/PURCHASES:

  • 12pm: South Africa to Sell 2.2 Billion Rand of 8% 2030 Bonds
  • 12pm: South Africa to Sell 2.2B Rand of 8.875% 2035 Bonds
  • 12pm: South Africa to Sell 2.2 Billion Rand of 10.5% 2026 Bonds

CORPORATE EVENTS:

  • Earnings Calls: SHP SJ

EU/UK
European stocks closed mixed on Monday as global investors focused on this week’s upcoming Federal Reserve meeting. The pan-European Stoxx 600 finished flat, paring earlier gains. Travel and leisure stocks jumped 2.3% while basic resources fell 1.4%. Major European bourses were pointing in opposite directions by the close. The Federal Open Market Committee is due to meet on March 16 and 17 and some analysts expect the U.S. central bank to revise up its GDP forecast, following a $1.9 trillion fiscal stimulus package that will send direct payments of up to $1,400 to most Americans. Germany and Italy became the latest countries to suspend the use of the AstraZeneca-University of Oxford vaccine over concerns about possible side effects, despite the World Health Organization saying there is no link between the shot and an increased risk of developing blood clots. Shares of AstraZeneca rose 0.4% on Monday. On Friday, the head of Germany’s public health agency on Friday warned that a third wave of coronavirus infections had begun. Near the top of the Stoxx 600, Finnish telecoms giant Nokia saw its shares rise 3% after partnering with Amazon, Microsoft and Google to create new cloud-based 5G radio offerings. Danone shares climbed 2.9% after Chairman and CEO Emmanuel Faber was ousted following pressure from activist investors. Stellantis gained 2% after Deutsche Bank started its coverage of the Peugeot-Fiat Chrysler merger with a “buy” rating. At the bottom of the European blue chip index, Dutch bank ABN Amro slid 5% as an investigation by Dutch prosecutors was broadened, according to Reuters.
US
The Dow and S&P 500 both hit new records on last night as investors grew optimistic about the economic reopening from the pandemic. The Dow Jones Industrial Average rose 174 points, or 0.5%, to a record close of 32,953. Monday was its seventh positive trading session in a row, the longest winning streak since August. The S&P 500 added 0.65% to 3,968, a fresh all-time high and its fifth straight day of gains. The Nasdaq Composite gained 1.1% to 13,459. Stocks treaded water for most of the day, until major averages popped in the final minutes of trading. Some reopening plays notched big gains, as well as some Big Tech stocks like Apple that have been weak lately. The small-cap benchmark Russell 2000 closed up 0.3%, also a new record. American Airlines and United Airlines shares rose 7.7% and 8.3%, respectively. Air travel over the weekend hit its highest level in more than a year as the Covid-19 vaccine rolls out and Americans return to vacationing. Apple shares closed higher by 2.5%, with most of the gain coming in afternoon trading. The gain cut its loss for the year to under 7%. As a part of the $1.9 trillion stimulus package that became law last week, the IRS started processing $1,400 direct payments for millions of Americans, which is expected to add juice to the already recovering economy.
ASIA
Asia-Pacific markets mostly edged higher Tuesday following a relatively subdued start to the global trading week as investors look ahead to the Fed meeting stateside. Australian shares rose as the benchmark ASX 200 gained 1.2%, after finishing near flat in the previous session. Most sectors traded up except for the energy and materials subindexes, which retraced some of their earlier losses to trade down 0.14% and 0.07%, respectively. Oil names and major miners still mostly traded lower but the country’s so called Big Four banks reversed course and advanced. Shares of Commonwealth Bank climbed 1.35% while ANZ was up 1.02%, Westpac added 1.14% and National Australia Bank advanced 1.11%. The Nikkei 225 in Japan advanced 0.63% while the Topix index gained 0.46%. In South Korea, the Kospi gained 0.31% while Hong Kong’s Hang Seng index rose 0.58%. Chinese mainland shares bucked the generally positive trend: The Shanghai composite was down 0.26% and the Shenzhen component declined 0.53%. That follows an overnight session on Wall Street where the Dow Jones Industrial Average and S&P 500 inched higher to closed at record highs amid optimism over the economic reopening.
COMMODITIES
Gold held a two-day advance as investors bet on the Federal Reserve reaffirming its dovish stance at its meeting this week. Spot gold was steady at $1,732.90 an ounce by 11:40 a.m. in Singapore, after rising 0.3% on both Monday and Friday. Silver and palladium fell, while platinum advanced.
Oil retreated for a third day to trade below $65 a barrel, hurt by weakness in the market’s near-term pricing structure and a firmer dollar. West Texas Intermediate fell 0.7%, after losing 1% over the prior two sessions. Brent also dropped.
Copper posted a fourth straight gain and most base metals rose after better-than-expected economic activity in China added to optimism over demand. Copper gained 0.7% to settle at $9,144.50 a metric ton at 5:51 p.m. on the London Metal Exchange, registering the longest rally since Feb. 25. Aluminum added 2.2%, despite a relentless expansion of output in China.
Iron ore futures ticked higher as Goldman Sachs Group Inc. predicted robust prices will remain in the short-term on a global recovery in steel demand. The most-active iron ore contract in Singapore rose as much as 1.4% to $160.25 a ton before trading at $158.80 by 11:09 a.m. local time. Futures in Dalian jumped 2.8%, following a 2.3% drop on Monday and a more than 6% decline last week.
Some key events to watch this week:

  • Fed Chair Jerome Powell will likely reaffirm his no-tightening policy stance at the Fed policy meeting Wednesday.
  • Bank of England rate decision Thursday. BOE is expected to leave monetary policy unchanged.
  • Bank of Japan monetary policy decision and Governor Haruhiko Kuroda briefing Friday.