19/10/2021 Asian markets are higher this morning as technology shares rallied and the prospect of solid corporate earnings helped counter concerns stemming from elevated inflation. MSCI Inc.’s Asia-Pacific equity index was at its highest since late September. Hong Kong outperformed and the city’s gauge of Chinese tech stocks surpassed its 50-day moving average. U.S. and European futures were little changed after U.S. stocks gained, with the Nasdaq 100 leading the way. Markets are taking some comfort from robust earnings but also grappling with the prospect of tightening monetary policy to quell price pressures. Traders are waiting to see if a slate of Federal Reserve speakers this week will try to calm the jitters stemming from the scaling back of pandemic-era policy support.
The oil rally paused with prices around multiyear highs. A natural-gas shortage is spurring demand for products like fuel oil and diesel for power generation. Investors are paying close attention to the earnings season to see how higher costs for energy and raw materials are affecting margins.
Locally, the JSE tracked weaker global markets yesterday, as fears about accelerating inflation and slowing economic recovery weighed on sentiment. The JSE All Share closed down 0.35 percent with miners being the biggest losers, the Resi closed down 1.12%, AGL – 3.18%, EXX – 2.33% and AMS – 2.27%. SA Inc names led the gainers with NED + 2.32 %, SLM + 2.12 % and MCG + 1.96 %.
South African ruling party’s suspended Secretary-General Ace Magashule to appear in court on corruption, fraud and money-laundering charges.
Germany said two people charged over the 2017 accounting scandal at furniture retailer Steinhoff, known as South Africa’s biggest corporate fraud, should be tried in court. No names have been released.
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European stocks are expected to open higher on Tuesday with markets buoyed by positive global sentiment.The FTSE opening 5 points higher, the DAX 17 points higher and the CAC 40 up 10 points, according to data from IG. Earnings in Europe come from Danone, Kering, Vinci and Deutsche Boerse today while BHP releases an operational review. Data releases include EU construction output in August and Spain’s trade balance data for August.
In the US, the S&P 500 and Nasdaq notched their fourth day of gains. The S&P 500 rose 0.34%. The Nasdaq was the relative outperformer, gaining 0.84% as Facebook, Amazon, Apple, Netflix and Google-parent Alphabet all closed higher. The Dow lost 36 points, dragged down by a 3% drop in Disney’s stock. Earnings season continues today with major reports from Johnson & Johnson, Procter & Gamble, Netflix and United Airlines. Of the 41 S&P 500 companies that have reported third-quarter results, 80% beat earnings expectations, according to FactSet. While reports have been strong, investors are looking for commentary from corporate America about supply chain issues and inflation. Morgan Stanley’s chief U.S. equity strategist Mike Wilson who has been calling for a correction in the broader market told clients yesterday that although fundamentals are deteriorating, the market seems to be resilient to a bigger pullback.
Shares in Asia-Pacific rose this morning with tech stocks in the region jumping following similar gains overnight for their counterparts on Wall Street. The Hang Seng Tech index in Hong Kong is up 2.25%. Hong Kong-listed shares of Alibaba and Meituan climbed 1.29% and 2.07% respectively but Tencent is 0.60% lower. Shares in Australia were also higher, with the S&P/ASX 200 up 0.18%. Minutes from the Reserve Bank of Australia’s October monetary policy meeting showed the RBA expecting the Australian economy to “return to growth in the December quarter and to its pre-Delta path in the second half of 2022. The Aussie Mng Index is down 1.55 %, with RIO – 3.11% and BHP – 1.84%. MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.99%.
Gold advanced after two straight days of declines as investors weighed mixed economic data with prospects of tighter monetary policy and elevated inflation. Data Monday showed production at U.S. factories fell by the most in seven months in September, in part reflecting a sharp drop in auto manufacturing as well as broader backlogged supply chains and materials shortages. A separate report showed confidence among U.S. homebuilders increased in October as demand remained strong. Gold + 0.53% $ 1774, Platinum + 1.29% $ 1052 and Palladium + 1.01% $ 2038.
Oil steadied near the highest level since 2014 in Asian trading as investors assessed the energy crunch roiling global markets. Futures in New York traded above $82 a barrel after rising 2.5% over the past three sessions. Russia is opting against sending more natural gas to Europe, while OPEC+ is failing to pump enough crude to meet its production target, exacerbating a supply crunch in energy markets. Crude has rallied over the past eight weeks as the energy crisis prompted by natural gas and coal shortages coincided with a rebound in demand from key economies emerging from the pandemic. The crunch is making winners out of oil refiners in Asia following a rush to secure alternative fuel supplies, lifting industry margins in a revival that’ll stretch into next year. Brent + 0.23% $ 84.52, WTI + 0.36% $ 82.74.