Stocks Climb as Japan, China Gain; Treasuries Dip

07/09/2021 Most Asian stocks rose this morning as Japan extended a rally and traders took heart from indications that the global recovery is weathering challenges from the delta virus variant.
Japan’s Nikkei 225 hit 30,000 for the first time since April as an index reshuffle added to optimism that a new prime minister will usher in favorable policies. China climbed, aided by a continuing rebound in technology stocks and better than expected trade data. S&P 500 and Nasdaq 100 futures edged up ahead of a resumption in U.S. markets after a holiday.
Global shares are at a record, overcoming concerns that the delta strain is hampering economic reopening and exacerbating supply snarls that are fueling inflation. A weak U.S. jobs report has bolstered the view that the Federal Reserve will delay paring the stimulus that has helped financial markets.

Locally, the JSE closed lower with the All Share down 0.18 percent. It was however supported by a rebound in NPN and PRX, which came on the back of some continued buying of Chinese Tech stocks, NPN and PRX closed up 2.63 and 2.55 percent respectively. Miners were the hardest hit with IMP, AMS and ANG the biggest losers. We should see a firmer open today as Tencent again trades up 2.67%, US Futures trade higher and IG Top 40 is up 161 points.

EARNINGS OUT LATER:

• Imperial Logistics Ltd.
• Shoprite Holdings Ltd.

ECONOMIC DATA:

• 8am: Aug. Gross Reserves, est. $56.7b, prior $54.5b
• 8am: Aug. Net Reserves, est. $52.9b, prior $51.7b
• 11:30am: 2Q GDP Annualized QoQ, est. 2.0%, prior 4.6%
• 11:30am: 2Q GDP s.a. QoQ, est. 0.9%
• 11:30am: 2Q GDP YoY, est. 17.8%, prior -3.2%

European stocks closed higher on Monday after U.S. jobs data indicated the Federal Reserve may have to keep monetary policy loose for longer, while speculation has risen over more stimulus in Japan and China. The pan-European Stoxx 600 closed up by 0.7%, with tech stocks adding 1.6% to lead gains as most sectors and major bourses entered positive territory. FTSE + 0.68%, CAC + 0.80%, DAX + 0.96%.

US Markets re-open after the Labor day holiday, Futures are firmer with the DOW up 48 points, S&P up 4.25 points and the Nasdaq up 27 points. One week into September, the major averages are all up, despite a muted kickoff to for the month. Year-to-date, the Dow is up 15.5%, the S&P is up 20.7% and the Nasdaq Composite is up 19.2%, although investors and analysts are still on the lookout for a major correction in September.

Asian markets are mixed this morning despite data showing China’s August trade data coming in above expectations. China’s exports jumped 25.6% year-over-year in August, customs data showed Tuesday — above expectations for a 17.1% rise by analysts in a Reuters poll. The Shanghai Comp is up 0.83% and the Hang Seng is up 0.75% as investors continue to buy Chinese Tech names. Tencent is up 2.67%. The Nikkei is 0.86 percent better with shares in the country continuing to trek upward after two straight trading days of solid gains. That comes as investor sentiment is buoyed by the prospect of more stimulus that has reportedly been called for by prime minister contender Fumio Kishida. The Reserve Bank of Australia announced earlier its decision to hold steady on the cash rate target, the ASX 200 is 0.15 lower and the Aussie Mining Index is 1.17 % lower.

Brent oil edged higher following two days of losses with China posting an unexpected gain in export growth, adding to positive economic signs emerging from key energy consumers. Brent + 0.43% $ 72.53, WTI -0.22% $ 69.14.

Gold is a tad softer coming off last Friday’s two and a half month high. Economic turbulence caused by Covid-19’s delta variant is testing investor expectations on when the Federal Reserve will start reining in its massive bond-buying program. Goldman Sachs Group Inc. just cut its forecast for U.S. growth this year, citing a “harder path” ahead for American consumers than expected. Gold investors are scrutinizing data for signs tapering could be delayed into next year. Last Friday’s weaker-than-expected jobs report pushed the precious metal to the highest since mid-July as Treasuries and the dollar retreated. Gold is 0.23% lower at $ 1818, Platinum – 0.16% $ 1022 and Palladium – 0.10% $ 2411.

Week Ahead:

• U.S. President Joe Biden will likely make his choice this week on whether to renominate Fed Chair Jerome Powell to a second term
• El Salvador’s Bitcoin law takes effect, making the virtual currency legal tender, Tuesday
• Dallas Fed President Robert Kaplan holds a virtual town hall discussion Wednesday
• ECB President Christine Lagarde holds a press conference after the bank’s rate decision Thursday
• China PPI, CPI, new yuan loans, money supply, aggregate financing, Thursday