Global Stock Rally Fades; Dollar Edges Higher

04/02/2021 A three-day rally in global stocks faded after Asian shares retreated with U.S. futures as earnings rolled in. Treasuries held overnight losses and the dollar edged higher. S&P 500 futures slipped after the gauge closed barely in the green Wednesday following its biggest two-day rally in almost three months. South Korean and Hong Kong stocks led Asian bourses lower. Chinese shares retreated amid hawkish comments on a trade blacklist from President Joe Biden’s nominee for Commerce secretary Gina Raimondo. Earlier, the Nasdaq 100 closed lower as Amazon.com Inc. slumped. Oil continued its ascent as OPEC+ said it will keep pushing to quickly clear the surplus left behind by the pandemic. Tencent trades slightly lower in HK. The JSE Top 40 futures are indicating a lower start, down 70 points or 0.12%, with the Rand weaker at 15.00 vs the USD.

Locally the FTSE/JSE Africa All-Share Index ended the session up 0.4% to close at 63,010, mostly supported by Sasol that staged a rally of 11.7% on the back of a surge in oil prices. Naspers and Prosus continued their upward trend, with the platinum and property sectors also gaining 1.5% and 1.04% respectively. Golds, banks and retailers ended the day slightly lower. The Rand were little changed at 14.96 per US$, with the Yield on 10-year govt rand bonds that fell 10.20 bps to 8.46 bps.
South Africa’s biggest companies are in talks with government to help finance and facilitate the rollout of coronavirus vaccines in a program they estimate will cost more than $800 million.

  • South Africa Treasury Likely to Maintain Its Bond Auction Levels
  • Southern African Lender Raises $240 Million in Debut Green Bonds
  • South Africa’s $13 Billion Virus Stimulus Is Way Short of Target
  • Moderna Offers South Africa Vaccines in First for Continent
  • EU Antitrust Regulators Set to Accept Aspen Concessions: Reuters

ECONOMIC DATA:

  • 1pm: Dec. Electricity Production YoY, prior -2.4%
  • 1pm: Dec. Electricity Consumption YoY, prior -2.1%

EU/UK
The pan-European Stoxx 600 closed up over 0.3%, with autos adding 2.7% to lead gains as most sectors ended the session in positive territory. Italian shares led the way, with the FTSE MIB jumping 2.1% on news that former ECB President Mario Draghi is set to form a unity government. The euro zone’s economic downturn deepened in January as coronavirus-induced lockdown measures hit the services industry, with the IHS Markit’s final composite PMI reading for January, a useful gauge for economic health, that came in at 47.8 last month compared to 49.1 in December, with anything below 50 representing a contraction. In terms of earnings, Vodafone said its organic service revenue returned to growth in the third quarter, beating analyst expectations. The stock rose 5.9% and was one of the top gainers in Europe. Siemens significantly raised its full-year guidance on Wednesday after a strong fiscal first quarter that saw orders, revenue and net income outstrip market expectations. The German conglomerate’s shares gained 2%. Publicis shares edged 2.2% higher after the world’s third-largest advertising group beat earnings expectations. Meanwhile, Italian lenders Banco BPM, Intesa Sanpaolo and UniCredit, along with infrastructure group Atlantia and postal service Poste Italiane, all rallied after news that former ECB President Mario Draghi is expected to become Prime Minister of a new unity government in Italy.
US
The S&P 500 climbed slightly last night, rising for a third straight day as investors digested a wave of corporate earnings. The broad equity benchmark rose 0.1% to 3,830, supported by energy and communication services. The Dow Jones Industrial Average gained 36 points, or 0.1%, to 30,723. The tech-heavy Nasdaq Composite dipped less than 0.1% to 13,610 amid a drop in Amazon shares. Shares of Google’s parent Alphabet jumped 7.3% after the technology giant reported 23% revenue growth and topped estimates for earnings, boosted by Google’s recovering advertising business. Amazon reported earnings that nearly doubled Wall Street estimates, while delivering its biggest revenue of all time at $125.56 billion, pushing it past the symbolic $100 billion mark for the first time. The ecommerce leader also announced that Jeff Bezos is stepping down as CEO. Amazon’s stock fell 2%. Amgen fell 1.4% after the biotech firm issued a weaker-than-expected full year outlook, noting that the pandemic would continue to hurt sales. Amgen was the biggest loser in the blue-chip Dow. Investors cheered a rebound in U.S. employment last month. A report Wednesday from payroll processing firm ADP showed private firms added 174,000 jobs in January, above the 50,000 Dow Jones estimate.
ASIA
Shares in Asia-Pacific slipped during Thursday trade, with South Korea leading the losses. In afternoon trade, the Kospi in South Korea declined 1.76%. Mainland Chinese stocks also fell, with the Shanghai composite down 1.02% while the Shenzhen component dropped 1.43%. Hong Kong’s Hang Seng index fell 1.45%. Over in Japan, the Nikkei 225 shed 0.9% while the Topix index slipped 0.3%. Stocks in Australia slid as the S&P/ASX 200 fell 0.87%. Australia’s exports of goods and services in December rose 3% month-on-month on a seasonally adjusted basis, the country’s Bureau of Statistics announced Thursday. MSCI’s broadest index of Asia-Pacific shares declined 1.08%. Shares of South Korean automakers Hyundai Motor and Kia Motors rose 0.2% and 0.41%, respectively, in Thursday afternoon trade. It came after sources told CNBC that Apple is close to finalizing a deal with Hyundai-Kia to manufacture an Apple-branded autonomous electric vehicle at the Kia assembly plant in West Point, Georgia. On Wednesday, shares of Kia surged following a local media report that the carmaker is set to sign a 4 trillion won (about $3.59 billion) deal with Apple to build electric vehicles, according to Reuters.
COMMODITIES
Silver settled further into a calmer trading pattern after the wild ride inspired in part by a retail- investor buying frenzy, Futures eased 1% to $26.61 an ounce, while spot prices retreated 1.2%.
Gold has lost ground in 2021, with prices currently on course for a back-to-back weekly loss, as investors weigh up efforts to resuscitate the U.S. economy, vaccination drives, and overall haven demand. Spot gold fell 0.6% to $1,822.91 an ounce, while palladium and platinum also declined.
Oil rose for a fourth day after OPEC and its allies pledged to keep rapidly clearing the global surplus built up during the Covid-19 pandemic. Futures in New York traded near $56 a barrel after closing at the highest level in more than a year. In global markets, gold prices rose to $1,844.48 an ounce, up 0.4%, supported by a retreat in US dollar. Among other precious metals, platinum today gained 0.3% at $1,097 and palladium shed 0.1% to $2,240.
Iron ore edged higher as investors weighed the market balance and the supply outlook after miner Vale SA’s quarterly production was less than expected. Brazil’s Vale produced 84.5 million tons in the fourth quarter, missing analyst estimates and falling below the prior quarter due to higher rainfall and tailings disposal restrictions. Futures climbed 0.7% to $147.90 a ton, following a 1.8% rebound on Wednesday.
Copper gained the most in two weeks in London as traders weighed signs of tightening spot supply against a looming seasonal slowdown in Chinese demand. Copper rose 0.8% to settle at $7,842.50 a ton, the most since Jan. 20. Zinc climbed 1.8%.