Stocks Rise on Tech, Stimulus Bets; With Silver Lower

02/02/2021 Asian stocks advanced with U.S. and European futures this morning on renewed hopes for stimulus, progress on vaccinations and receding concerns about volatile retail trading. Silver pulled back from an eight-year high. Most major Asian markets climbed with technology shares outperforming ahead of earnings today from Amazon.com Inc. and Google’s parent Alphabet Inc. S&P 500 futures rose after the gauge rebounded from last week’s selloff in a broad-based advance. European contracts pointed higher. Tencent is trading up 2.5% in HK. The JSE Top 40 futures are indicating a better start, up 570 points or 0.99%, with the Rand fairly steady at 15.03 vs the USD. We should see some support from Naspers and Prosus with Tencent better in HK.

Locally the FTSE/JSE Africa All-Share Index up 0.5% to 62,796, supported mostly by a rally in miners, with platinums contributing the most, up 2.9% as well as Naspers and Prosus that followed Tencent’s spike in HK. Gold lost the most down 2.8% , with most financials, retailers and property stocks all lower on the day. The Rand was 0.7% stronger at 15.0599 per US$, with the Yield on 10-year govt rand bonds that fell 9.3bps to 8.65 bps.
President Cyril Ramaphosa eased a ban on alcohol sales and reopened public spaces that were closed in Covid-19 hotspots late last year as a post-holiday spike in coronavirus cases wanes. The government has also secured millions of additional vaccines to help bring the disease under control.

  • 12:35pm: President Cyril Ramaphosa delivers opening address at Mining Indaba Virtual Conference
  • England Boosts Tests to Curb Spread of South Africa Variant
  • EU Wins Boost From Bayer; U.K. Secures Vaccines: Virus Update
  • Zuma Defies South Africa’s Top Court, Shuns Graft Inquiry
  • JPMorgan, BofA See Scope for Longer S. Africa Stock Rally
  • South Africa Factory Mood Shows Best Start to Year Since 2015
  • South Africa Loses 33% Fewer Rhino to Poachers in 2020
  • 10am: Alexander Forbes hosts discussion on investing in South Africa and globally in 2021
  • Distell Extends Gains as S. Africa Set to End Alcohol Sales Ban
  • Glencore, Freyr Plan Supply of Up to 3,700 Tons Cobalt Cathodes

GOVERNMENT:

  • 9:30am: Department of Public Works and Infrastructure briefs lawmakers on investigations into procurement and construction of Beitbridge border fence
  • 9:30am: Zondo Commission hears testimony from Zukiswa Rantho, former chairperson of the Portfolio Committee on Public Enterprises
    EARNINGS
    Vodacom 3Q Revenue Gains 6.4%, Increases Network Investment (1)
    3Q Revenue 25.13B Rand Vs. 23.62B Rand Y/y
    3Q SERVICE REV. 19.63B RAND, +3.9% Y/Y

EU/UK
The pan-European Stoxx 600 climbed 1.2% by the market close, with tech shares adding 2.4% to lead gains as all sectors bar oil and gas entered positive territory. European markets started the trading week on a positive note along with their global counterparts, despite turbulent trading last week after retail investors prompted what Goldman Sachs has called the biggest short squeeze in 25 years. European investors are keeping an eye on developments in the deployment of coronavirus vaccines after tensions last week over supplies of the vaccine, particularly from AstraZeneca, and criticism over the speed of the vaccine rollout in the EU. On the data front, euro zone unemployment held steady at 8.3% in December, the EU’s statistics office confirmed on Monday. Meanwhile British manufacturing grew at its slowest pace for three months in January as Brexit and Covid-19 weighed on orders. The final IHS Markit/CIPS manufacturing PMI reading came in at 54.1, down from a spike of 57.5 in December as businesses raced to beat the Jan. 1 Brexit deadline. In terms of individual share price movement, precious metals miner Fresnillo jumped nearly 9% as the Reddit-fueled frenzy for highly-shorted stocks spilled into silver, sending futures surging. Toward the bottom of the European blue chip index, France’s Klepierre slid 7.5% after announcing that 70% of its malls had been affected by coronavirus restrictions across Europe.
US
Stocks jumped on Monday, the first session of February, as Wall Street appeared to shake off concerns about a speculative retail trading mania that largely drove the market’s worst weekly sell-off since October. The Dow Jones Industrial Average rose 229 points, or 0.8%, to 30,211, led by Microsoft and Visa. The S&P 500 climbed 1.6% to 3,773, posting its best day since Nov. 24 as all 11 sectors gained. The Nasdaq Composite jumped 2.6% to 13,403. GameStop, the brick-and-mortar video game retailer that has been the center of attention on Wall Street, fell 30.8%. Last week, the popular stock among retailer investors on Reddit forum WallStreetBets soared 400% amid extreme trading volume and volatility. AMC Entertainment — another short squeeze target that jumped 277% last week — closed flat on Monday. Meanwhile, a group of 10 Republican senators sent President Joe Biden a letter on Sunday, urging him to consider a smaller, scaled-down Covid-19 relief proposal. His current plan calls for $1.9 trillion in additional fiscal stimulus. Another busy week of earnings is coming up with 99 S&P companies set to report; Alphabet, Amazon, Alibaba, Snap, Exxon, Biogen, Pfizer and Chipotle are among the names set to report this coming week.
ASIA
Stocks in Asia-Pacific rose in Tuesday trade following an overnight jump on Wall Street. India’s Nifty 50 jumped about 2.8% while the BSE Sensex also surged more than 3.17%. That came after India’s finance minister on Monday presented the country’s budget for the fiscal year that begins April 1 and ends March 31, 2022. The Taiex in Taiwan also saw strong gains as it rose 2.51%. South Korea’s Kospi jumped about 1% in afternoon trade. Mainland Chinese markets nudged higher, with the Shanghai composite up 0.55% while the Shenzhen component gained 1.544%. In Japan, the Nikkei 225 gained 0.81% while the Topix index advanced 0.8%. Shares of Japanese game maker Nintendo fell around 1% in Tuesday afternoon trade, shedding earlier gains. The firm on Monday increased its full-year forecast for Switch games console sales. The Japanese government is set to extend the state of emergency covering Tokyo and other regions till March 7 in order to contain the coronavirus, local media reported. Over in Australia, the S&P/ASX 200 was up 1.56%, after the RBA kept cash rates steady. MSCI’s broadest index of Asia-Pacific shares outside Japan traded 1.75% higher.
COMMODITIES
Silver’s surge to an eight-year high lost momentum after a key exchange hiked margins and warnings about the rally mounted, casting doubt over the lasting influence of an investor army that’s thought to have contributed the jump. Most-active silver futures declined as much as 3.7% on the Comex after the CME Group said margins will rise to $16,500 per contract from $14,000, effective Feb. 2.
Oil rose past $54 a barrel with help from a falling dollar after jumping the most in three weeks on optimism over the demand outlook. Futures in New York headed for the highest close in almost a year after being swept up with a rally in U.S. stocks to rise 2.6% Monday.
Gold is flat early on in the Asia session, following a rebound in U.S. stocks overnight as equities calmed after last week’s turbulence. Gold appears to be caught between positive U.S. stimulus momentum and its traditional foe: a strong dollar. Spot gold is flat to slightly lower at $1,857 an ounce. Platinum is trading softer, down 1.5%, with Palladium up 0.52%.
Iron ore futures declined as investors weighed improved shipments from key exporters and signs that China’s robust demand may be starting to wane. Prices in Singapore slumped as much as 6% earlier this morning before
paring some losses to hold near $150 a ton.
Copper rebounded from the lowest close in a month amid concerns for concentrate supply from the top mining countries. Codelco, the world’s biggest copper producer, activated its wet weather contingency plan and made minor alterations that are expected not to have a “major impact”, the state-owned company said in an email. It has kept its miners operating through heavy rain in the past few days in Chile. In Peru, the country has started 15-day quarantine for some regions amid the pandemic, which poses risks to mining activities.