Stocks, Futures Rise; Dollar Near Four-Month Low

18/05/2021 Asian stocks and U.S. futures rose Tuesday with investors weighing the pace of growth as economies reopen against a pick-up in virus cases in the region. The dollar dipped. Taiwan outperformed, jumping as much as 5.2%, as the financial stabilization fund said it was monitoring stocks after the worst rout in more than a year and data showed foreign investors had continued buying during the selloff. Japan and Hong Kong paced gains in a gauge of the region’s stocks. Earlier, technology and communication services stocks led U.S. stocks lower as volatility ticked up. European futures climbed. Treasuries were stable after retreating. A Bloomberg gauge of the dollar fell to near a four-month low touched last week. Oil was up marginally and near a two-year high amid optimism around a demand recovery in regions such as the U.S., even as coronavirus flares up in parts of Asia. Gold traded near its highest in almost four months. Asian copper miners advanced as they may benefit from tighter regulations and higher taxes that could hit top producer Chile. Tencent trades 0.67% higher in HK. The JSE Top 40 futures are indicating a better start, up 550 points or 0.9%, with the Rand that has firmed to 14.05 vs the USD.
Here are some key events this week:

  • The Fed publishes minutes from its April meeting Wednesday, which may provide clues to officials’ views on the recovery and how they define “transitory” when it comes to inflation.
    The FTSE/JSE Africa All-Share Index closed up 0.9% to 67,217, mostly supported by the Precious Metals & Mining index that gained 3.58%, with gold counters GFI and ANG adding 5.4% and 5.3% respectively. Food retailers also fared well, with WHL, SPP and SHP all ending the session up more than 2%. Property and Banks ended the day negative, shedding 1.4% and 0.53% respectively. The Rand was up 0.1% to 14.11 per US$, with the Yield on 10-year govt rand bonds that rose 42.10bps to 9.53%.
    President Cyril Ramaphosa attends summit on the Financing of African Economies hosted by French President Emmanuel Macron. The meeting will focus on supporting the economic recovery of African countries affected by the Covid 19 pandemic.
  • Key African Central Banks May Hold Rates on Growth Concerns
  • Gold Hits Three-Month High as Fund Buying, ETFs Buoy Sentiment
  • South African Union Rejects Eskom‘s 1.5% Wage-Increase Offer
  • Seriti Deal Nears Completion as Eskom Agrees to Coal Price Hike
  • South African Ex-President Zuma‘s Corruption Trial Postponed
  • PSG Konsult Shares Jump to Record After Annual Report
  • Astral Foods Falls Most in Four Months After 1H Earnings Drop
  • Vodacom to Report Results; Shares Up 2.2% YTD
  • Watch Mining Stocks as Copper, Iron Ore Prices Resume Gains
  • MEDIA SUMMARIES:
  • Daily Maverick: South Africa’s upstream petroleum bill proposes new SOE, 20% stake and BEE rules
  • Daily Maverick: Maputo asks Johannesburg High Court to order South Africa to extradite former Mozambican finance minister
  • Business Day.za: EDITORIAL: Share swap still keeps Naspers in the driving seat
  • Business Day.za: Big Tree listing brings a pure copper play to investors

EARNINGS:

  • Vodacom Group Ltd. (VOD SJ)

GOVERNMENT:

  • Lawmakers to hold public hearings on the Financial Sector Laws Amendment Bill and on the National Health Insurance Bill

BOND SALES/PURCHASES:

  • 11am: South Africa to Sell 1.3 Billion Rand of 7% 2031 Bonds
  • 11am: South Africa to Sell 1.3 Billion Rand of 8.75% 2044 Bonds
  • 11am: South Africa to Sell 1.3 Billion Rand of 8.5% 2037 Bonds

EU/UK
European stocks closed lower on Monday as global investors weighed concerns over a rise in inflation and an increase in coronavirus cases, largely attributed to the spread of a variant that emerged in India. Coronavirus remains a key concern for investors as economies reopen. The U.K. is easing lockdown further on Monday with pubs and restaurants set to reopen to customers for in-dining. Museums and cinemas are also allowed to reopen. U.K. Prime Minister Boris Johnson has called for a cautious approach to the unlocking, however, after he warned the spread of the Indian variant could threaten further easing on June 21. On the earnings front, Ryanair said it had seen a “strong snap back” in bookings in recent weeks, but reported a full-year net loss of 815 million euros ($989 million) on Monday as Covid-19 restrictions pushed its traffic levels down 81%. British technical products company Diploma climbed 6.8% to lead the Stoxx 600, after reporting a rise in fiscal first-half profit and projecting full-year earnings ahead of expectations.
US
Persistent weakness in technology stocks led the major indexes lower on Monday after last week’s hotter-than-expected inflation readings sparked a downturn in equity markets. The Dow Jones Industrial Average dipped 54 points, or 0.2%, to 34,327. The S&P 500 lost 0.3% to 4,163 as the tech sector pulled back 0.7%. The Nasdaq Composite fell 0.4% to 13,379. Big Tech came under pressure to start the week, with Apple and Netflix each down 0.9%. Microsoft shed 1.2%, while Tesla dropped more than 2% as famed investor Michael Burry revealed a big short position on the electric carmaker. Traders have punished the technology sector in recent weeks amid a broader shift out of growth stocks and into cyclical, reopening trades in energy, financials and materials. Communication services stock Discovery bucked the trend, up big after AT&T announced Monday that it would merge WarnerMedia, which includes HBO, with Discovery. The new entity will trade as its own public company. Discovery’s Class B stock jumped nearly 14%, while AT&T ended the day slightly lower after hitting a record high earlier in the session.
ASIA
Shares in Asia-Pacific mostly jumped in Tuesday morning trade, as stocks in Taiwan led gains among the region’s major markets. The Taiex in Taiwan surged 4.93% in Tuesday afternoon trade. Those gains followed a nearly 3% drop on Monday amid fears of domestic coronavirus infections. In Japan, the Nikkei 225 also saw robust gains as it jumped 2.24% while the Topix index advanced 1.64%. Japan’s economy shrank at an annualized rate of 5.1% in January to March, government data showed Tuesday. On a seasonally adjusted basis, gross domestic product in January-March fell 1.3% quarter-on-quarter, slightly lower than expectations in a Reuters poll for a 1.2% decline. That came as resurgent Covid infections in the country snapped two quarters of consecutive growth. Over in Hong Kong, the Hang Seng index rose 1.25%. Mainland Chinese stocks were mixed, with the Shanghai composite fractionally higher while the Shenzhen component dipped 0.2%. South Korea’s Kospi edged 1.26% higher. The S&P/ASX 200 in Australia rose 0.61%. Minutes from the Reserve Bank of Australia’s May monetary policy meeting released Tuesday showed the central bank’s board viewed the conditions for a rate rise as unlikely to be met “until 2024 at the earliest.” MSCI’s broadest index of Asia-Pacific shares outside Japan surged 1.38%.
COMMODITIES
Gold rose to the highest in more than three months as concerns over the pace of a global recovery crept back in following a flareup in coronavirus cases in parts of Asia. Spot gold rose as much as 0.4% to $1,873.82 an ounce, the highest since Jan. 29, after settling around $1,868 earlier. Silver and palladium gained, while platinum steadied.
Brent oil edged toward $70 a barrel with optimism building about the demand outlook in key regions such as the U.S., even as the coronavirus makes a comeback in parts of Asia. Futures in London climbed for a third session, while New York crude rose from the highest settlement in two years.
Copper rose toward a record as the potential for tighter regulation and higher taxes in Chile fuel concerns about the long-term supply outlook. Copper rose as much as 1.2% to $10,500.50 a metric ton on the London Metal Exchange before settling at $10,466.50. Zinc gained 2.1% to the highest since 2018 and nickel surged 1.4%.
Iron ore futures rose for a second day amid demand optimism in the wake of robust output data from China and lower inventory levels. Iron ore futures in Singapore rose 2.8% to $213.25, after climbing 2.9% on Monday. Contracts in Dalian jumped as much as 4.9%, and rebar and hot-rolled coil futures edged higher in Shanghai.