Tencent Bounces 10% on China Revival

29/07/2021 Asian stocks jumped Thursday on China’s efforts to soothe market nerves and the Federal Reserve’s reassurance that it’s moving very gradually toward tapering stimulus if the U.S. makes more economic progress. China’s selloff is easing after authorities took steps to reassure investors, including articles in state-run media suggesting the rout went too far. The central bank boosted cash injections into the financial system to ease anxiety. The Fed reiterated that a recent surge in inflation is likely transitory and linked to the economic reopening from the pandemic. The central bank’s $120 billion in monthly bond purchases, along with robust corporate earnings, have supported market sentiment. Risks remain from the spread of the delta variant of Covid-19 and China’s efforts to rein in its largest companies.

Locally, it was welcome back Naspers and Prosus. Naspers and Prosus rallied through the afternoon to close up 7.89 and 6.86 percent respectively, helping the All Share close up 1.76% at 68525. Meanwhile South African Finance Minister Tito Mboweni affirmed his commitment to reining in debt amid concerns that the coronavirus pandemic and a week of deadly riots will further erode the state’s already shaky finances. The minister’s comments came after National Treasury officials outlined how a 38.9 billion rand ($2.6 billion) relief package for businesses and individuals affected by the worst civil unrest since the end of White-minority rule in 1994 will be funded. About 330 people died and thousands of businesses were shuttered after protests against the jailing of former President Jacob Zuma on contempt of court charges morphed into a rioting and looting spree.

We should be in for a positive start as Tencent bounces 10%, Asian markets are better and US Futures slightly higher. IG Markets Top 40 is up 558 points.

• IMPERIAL LOGISTICS UNIT BUYING J&J TRANSPORT FOR $300 MILLION
• LIBERTY SEES 1H NORMALIZED HEPS SWINGING FROM LOSS TO PROFIT
• Moneyweb: Prosus faces investor criticism over $144 million fee for Naspers share swap

EARNINGS:

• ANGLO AMERICAN 1H ADJ EPS $4.30, EST. $3.83
• ANGLO RETURN $2.1B INTERIM DIVIDEND; $2.0B EXTRA RETURN, $ 4.1Bln TOTAL
• Anheuser-Busch InBev SA later today

ECONOMIC DATA:
• 8am: June Private Sector Credit YoY, est. 0.40%, prior -0.42%
• 8am: June Money Supply M3 YoY, est. 2.00%, prior 1.82%
• 11:30am: June PPI MoM, est. 0.4%, prior 0.4%
• 11:30am: June PPI YoY, est. 7.3%, prior 7.4%
European markets closed higher on Wednesday amid a busy day for major corporate earnings, while investors awaited a key policy announcement from the U.S. Federal Reserve. The pan-European Stoxx 600 index provisionally closed up by 0.7%, with technology shares climbing 2.3% to lead the gains as most sectors and major bourses ended the session in positive territory. Earnings were front and center for investors in Europe on Wednesday, with a slew of companies including Deutsche Bank, Barclays and GlaxoSmithKline releasing their results. Stocks also got a boost from news that fully-vaccinated U.S. and EU travelers will soon be allowed to visit England without having to quarantine. FTSE + 0.29%, CAC + 1.18%, DAX + 0.33%
In the US the markets were a little mixed, the Dow dipped 127.59 points, the S&P 500 ended the session little changed at 4,400.64 and the Nasdaq climbed 102 points or 0.7%. the moves came after Fed Chairman Jerome Powell cautioned in a press conference that although the economy is making progress toward its goals, it has a ways to go before the central bank would actually adjust its easy policies. Treasury yields inched climbed higher in anticipation of the announcement but pulled back slightly following Powell’s comments. PayPal and Facebook fell 5% and 3% in after-hours trading, respectively, after warning of significant growth slowdown as they reported quarterly earnings. Meanwhile, shares of Ford jumped nearly 4% after it raised its 2021 outlook, saying it’s selling more cars that are more expensive, though it missed analysts’ estimates on earnings. The major averages are on track to end the month higher, with the S&P up 2.4% for July. The Nasdaq Composite and Dow are up 1.8% and 1.2%, respectively. On the Data front we have US GDP out later today.
In Asia the Hang Seng index jumped 3.17% in afternoon trading on Thursday, continuing its bounce back after closing more than 1% up the day before. The index had dived more than 8% over two days early this week. Chinese tech stocks in Hong Kong, which had been hit hard by the market rout earlier in the week, soared. Shares of Tencent jumped 9.44% while Alibaba gained 7.26% and Meituan climbed 9.78%. The Hang Seng Tech index soared 7.33%. The rest of the region is better with the Nikkei up 0.71%, the ASX 200 up 0.45% and the Shanghai Comp up 1.45%. MSCI’s broadest index of Asia-Pacific shares outside Japan traded 1.99% higher.
Gold prices rose to its highest level in over a week on Thursday after the U.S. Federal Reserve failed to give a timeline for its tapering plans and said it was “ways away” from considering raising interest rates. Spot Gold is up 0.53% at $ 1816, Platinum up 0.67% at 1075 and Palladium up 0.70% at 2643.
Oil advanced as declining stockpiles of U.S. crude, gasoline and distillate signaled healthy demand during the nation’s summer driving season. Brent + 0.52% $ 75.15, WTI + 0.54% $ 72.77.