Stocks, Bond Yields Rise as Traders Weigh Recovery

20/10/2021 The Asia-Pacific stock gauge rose for a second day today, tracking a U.S. climb as corporate earnings helped to improve investor sentiment. A rally in Chinese technology firms such as Alibaba and Tencent bolstered Hong Kong shares on hopes the worst of Beijing’s regulatory crackdown is over. Equities fluctuated in China, where the central bank boosted short-term liquidity, held loan prime rates steady and set a weaker-than-expected yuan reference rate in a sign of discomfort over currency strength. U.S. and European futures are little changed. The S&P 500 closed near a record as traders weighed the corporate impact of supply-chain snarls and higher commodity prices. Bitcoin is close to hitting a record on optimism following the debut of the first Bitcoin-linked exchange-traded fund listed in the U.S. Oil slipped from a seven-year high.

Locally, the Rand has firmed to its strongest level in a month against the dollar, gaining along with other emerging-markets currencies as strong corporate earnings lifted global sentiment. The Rand is R 14.50/$ and R 20.02/GBP. The local currency all but recouped its losses after falling more than 1% on Monday, its biggest one-day fall in three weeks but inflation and the outlook for the global economy remain a concern and this was reflected in local stocks, which pared earlier gains to end the day little changed. The JSE All Share closed down 0.02% despite NPN and PRX up 3.29 and 2.70 percent respectively. Volume on the local market was thin with R 16.7 billion trading. We should be in for a positive start with Asia in the green and Tencent up 2.00%. IG markets Top 40 is up 206 points.

South African inflation is expected to accelerate to 5% in September, according to a median estimate of 14 economists in a Bloomberg survey. That compares with 4.9% a month earlier.

MTN Group Ltd. is in advanced talks with American Towers Inc. and IHS Holdings Ltd. about the sale-and-lease back of its South African tower portfolio, according to people familiar with the matter.

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Local names going Ex-div today: AVI 275, BID 400, BCF 32, CPI 1200, GRT 60, HYP 336, RMI 22.50, SAC 10.27, SPG 47.

EARNINGS:

PICK N PAY STORES 1H ADJ EPS 0.7085 RAND VS. 0.3712 RAND Y/Y.
PICK N PAY STORES 1H ADJ EPS 0.7085 RAND VS. 0.3712 RAND Y/Y.
PICK N PAY STORES INTERIM DIV/SHR 0.358 RAND

ECONOMIC DATA:

10am: Sept. CPI MoM, est. 0.2%, prior 0.4%
10am: Sept. CPI Core MoM, est. 0.2%, prior 0.3%
10am: Sept. CPI YoY, est. 5.0%, prior 4.9%
10am: Sept. CPI Core YoY, est. 3.1%, prior 3.1%
European stocks are expected to open in flat to lower this morning amid more mixed sentiment globally overnight. The mixed open for European markets comes after a series of upbeat trading sessions in recent days as investors digested the latest earnings from the U.S. European investors will be looking out for earnings from Carrefour, Atos, Metro, Sartorious, AkzoNobel, Roche, Nestle, Antofagasta and Metro Bank all out today. Data releases include U.K. inflation data for September, German producer prices for September and the latest Russian producer price index figures. Yesterday’s major markets FTSE + 0.19%, CAC – 0.05% and the DAX +0.27%.
Overnight in the UA, the Dow advanced nearly 200 points, or 0.56%, for its third positive session in the last four days. The S&P 500 added 0.74%, while the Nasdaq advanced 0.71%. Both saw their fifth straight day of gains, the longest daily winning streak since late August. With yesterday’s moves, the major averages are approaching their all-time highs. The Dow is 0.49% below its record, while the S&P and Nasdaq Composite sit 0.58% and 1.78% below their highwater marks. More than 70 S&P 500 components report earnings this week. Today, Verizon, Biogen and Canadian Pacific Railway are on deck before the opening bell. IBM, Tesla, CSX and Las Vegas Sands are among the names set to report after the market closes. US futures a tad lower with the Dow – 17 points, S&P – 3.75 points and the Nasdaq – 20 points.
Markets in Asia were largely higher this morning as China kept its benchmark lending rate unchanged. China kept the one-year loan prime rate (LPR) unchanged at 3.85% while the five-year LPR was also held steady at 4.65%. That was in line with expectations from a majority of traders and analysts in a snap Reuters poll who had predicted no change in both the one-year loan prime rate as well as the five-year LPR. Official data released today also showed growth of new home prices in China stalling in September for the first time since Feb. 2020, according to Reuters. China Beige Book’s Leland Miller told CNBC on Tuesday that China needs new growth drivers as its property sector slows down. Hang Seng + 1.25% CSI 300 – 0.14%, Nikkei + 0.11%, ASX 200 + 0.53%, Aussie mng index + 0.03%. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.79%.
Oil slipped from the highest level in seven years after an industry report pointed to another increase in U.S. crude stockpiles. Futures in New York traded below $83 a barrel after climbing more than 3% over the past four sessions. The American Petroleum Institute reported crude inventories rose by 3.29 million barrels last week, according to people familiar with the figures. That would be a fourth weekly expansion if confirmed by official government data later today. Brent – 0.54% $ 84.60 and WTI – 0.46% $ 82.59.
Gold steadied as investors waited for comments from Federal Reserve officials this week which could provide insight into the prospects of tighter monetary policy. Bullion has fluctuated recently as markets assess the possibility of earlier-than-expected tightening to contain inflationary pressures. Upcoming speeches and discussions by officials including Randal Quarles, Mary Daly and Chair Jerome Powell could provide more clues, after Governor Christopher Waller said yesterday the Fed should begin tapering its bond-buying program next month, though interest-rate increases are probably “still some time off.” Gold + 0.32% $ 1775, Platinum + 0.01% $ 1044, Palladium – 0.48% $ 2091.